Peter Mair (December 17, 2010: posted by David Farrell)
One of the issues that is likely to dominate the forthcoming general election is the question of whether Ireland should default on the crippling debt repayments. Reading both on and between the lines in the analyses of a number of economic commentators in recent weeks, I get the impression that there is now growing support for default. If, as seems likely, this is then offered as a serious option by one or more of the (left?) parties in the election, and if Fianna Fáil and Fine Gael policy remains committed to austerity and repayment, then the question of default could even become the decisive issue, with the election itself serving as a referendum on repayment options.
What seems to have been forgotten is that we’ve been here before. Back in 1932, when Fianna Fáil first came to power, one of the dominating issues of the election concerned the repayment of the land annuities. The land annuities were paid by Irish farmers to the Irish Land Commision which then transferred the sums to British National Debt Commissioners. The intention was to repay the loans that had been raised by the British government in order to buy out Irish landlords following the various Land Acts of the late 1890s and early 1900s. These debt payments were always strongly opposed by Fianna Fáil. In his lengthy biography of De Valera, Tim Pat Coogan quotes a speech by the Fianna Fáil leader in Blackrock in 1927 where he proposed a re-opening of the financial settlement, which, he stated, “imposes on the country an annual exportation of income and revenue of over five million pounds a year. The community cannot bear that and prosper.” Coogan goes on to cite Colonel Maurice Moore, a brother of the novelist George Moore, who compared the commitment to debt repayment through the land annuities “to bribing a burglar after being burgled” (Coogan, 410-11).
Eighty years on, the echoes are uncanny, particularly since now, as then, it seems impossible for the country to bear the costs of repayment and to prosper. Today, however, the role of Fianna Fáil has changed. Back in the late 1920s, in opposition, it opposed the debt repayments. Today, in government, it has negotiated their terms. Looking back, it seems ironic that it was a commitment to default which contributed to launching Fianna Fáil into the position of power that it has since rarely vacated.
The collection of the annuities continued under De Valera, of course, but the money was used to bolster social and infrastructural spending in Ireland rather than being repatriated back to Britain. The dispute also led to the so-called ‘economic war’, with the British imposing tariffs on the export of Irish goods. This was to be predicted at the time. What is less easy to predict are the consequences of possible default in 2011. Perhaps it might be negotiated.