Ireland's euro crisis election

Tomorrow, voters in Ireland go to the polls in what will be the first general election prompted directly by the euro crisis. One thing is certain: the Fianna Fáil government will be unceremoniously turfed out after presiding over the banking crisis and EU/IMF bailout that killed the Celtic Tiger. Austerity is the new watchword in Dublin, along with emigration; once again, the Irish are heading overseas because the future at home seems so grim.

Yet no new political force has emerged as a result of the catastrophes of the past few years. There will be no big swing to the left tomorrow – even the centre-left Labour party’s poll lead last summer seems a long time ago – and no ripping up of the bailout agreement as a result of the vote. Domestically, Fianna Fáil’s inevitable shellacking (to borrow Obama’s phrase) will be a historic moment. But for many of those watching from elsewhere in the eurozone, the Fine Gael-led government that will result (most likely a coalition with Labour) will be a reassuringly gentle popular response to the dramatic failings of Ireland’s political establishment.

Irish elections have long been fought differently to those elsewhere in Europe. Local issues have always been surprisingly important in getting national politicians elected. And for 90 years, the civil war has cast a shadow over the ballot box. When describing the difference between Fianna Fáil and Fine Gael recently, a presenter from the country’s national broadcaster RTE quipped: "Just watch the Michael Collins movie."  He was referring to the 1996 film starring Liam Neeson that depicts the establishment of the Irish Free State under the Anglo-Irish Treaty of 1921, and the bitter conflict that ensued between those who backed the treaty (which offered self-government within the British Empire) and those who were prepared to settle for nothing less than a republic.

Fianna Fáil, which was founded by the republican hero Eamon de Valera, grew out of the latter camp. It has been in power in Ireland for almost three-quarters of the 79 years since it first entered government in 1932, and has been the single largest party in the Dáil at every general election since then, making it one of the most successful political parties in the democratic world.

This time, however, it really is the economy, stupid, and FF’s heritage counts for little right now when set against the fact that it presided over the disasters of the last few years. Its long, uninterrupted reign as the biggest force in Irish politics is about to end in dramatic fashion: latest opinion polls put the party at around 15 per cent, meaning that it risks finishing a historically ignominious third behind Labour. Even FF’s own candidates are playing down their party allegiance, and tomorrow’s result could shift the electoral landscape for a very long time.

Which is not to say that Irish voters are enthusiastically embracing the centre-right Fine Gael. Its leader, Enda Kenny, is a North Korean-style, 1/100 odds-on favourite to be the country’s next Taoiseach (Prime Minister) and yet personally pretty unpopular. In some recent polls he has ranked below both Eamon Gilmore, the Labour leader, and even FF’s Micheál Martin. Amid widespread accusations of cronyism and corruption, it is illustrative of the public attitude towards the old political class that the 202 independent candidates make up more than a third of the total (there were 90 in 2007).

Yet Fine Gael, a centre-right party who are very much part of that old class, will be the primary beneficiaries of public anger simply by dint of being the biggest party that wasn’t in government when the crash happened. Getting elected in these circumstances is a doddle. The big challenge will come after Friday, in governing as the austerity measures prompted by the EU/ IMF bailout really start to bite.

FG wants to renegotiate the interest rate that Ireland pays on its bailout loans and impose some losses on some of the Irish banks’ senior bondholders, in order to cut taxpayers' share of the burden of propping up the banking sector. Keen to play the statesman even before taking office, Kenny flew to Berlin earlier this month to meet Merkel (who he apparently knows well because of alphabetical seating arrangements at meetings of the European People’s Party) and emerged promising no change to Ireland’s 12.5 per cent corporation tax rate. 

It is unsurprising that Kenny is keen to model himself as a defender of Irish economic interests during the campaign. In what was for a long time one of the most pro-European member states, public anger has already spread from Ireland’s domestic politicians to the eurozone leaders who many see as having foisted their “help” onto Ireland to protect French and German investors in Irish banks. The irony is that ultimately, a FG-led government will see through most of the austerity to which its FF predecessor signed up; its election will give the bailout package its first democratic mandate.

In fact, the new Taoiseach is unlikely to get it all his own way even on the limited changes to the bailout he seeks, with the ECB opposing losses for bondholders for fear of contagion. This, and the common economic ground between FF and FG, will become much clearer within weeks of the election, at the EU financial summit in March. That summit will be key to the eurozone’s long-term stability. It will also, perhaps, reveal that the “Michael Collins movie” remains the biggest difference between Fianna Fáil and its successor in government.