Downturn turns to crisis in Ireland's year of refusal

Dublin - European Union officials will remember 2008 as the year Ireland rejected its reform treaty, but for most Irish people it was the year the bubble burst and the Celtic Tiger economic miracle came crashing to an end.

What started as whispers about economic downturn in spring turned to cries of crisis in autumn, with the economy grinding to a halt as a result of a construction industry meltdown and the credit crunch.

The government's defeat in the rejection of the Lisbon Treaty by referendum in June was a major political upset in a tumultuous year, in which Prime Minister Bertie Ahern in the south and First Minister Ian Paisley in Northern Ireland stepped down.

Ahern's troubles began when a tribunal set up to investigate planning corruption in Dublin in the 1990s turned its gaze to his convoluted personal finances.

After some bizarrely-creative explanations of how his bank accounts came to be credited by sums amounting to over 100,000 euros (128,910 dollars), Ahern thought it prudent to step down on May 6, rather than to lead the government's yes campaign in the referendum on the Lisbon Treaty.

Ahern's action proved misguided. It was felt that even a discredited Ahern, who was an extremely popular prime minister for almost 11 years, might have persuaded the nation to give the go-ahead to the Lisbon Treaty, aimed at streamlining decision-making in the
27-nation bloc.

With Cowen at the helm, 53.4 per cent voted to reject the treaty. The fallout from this refusal dominated headlines until the extent of the trouble brewing in the public finances became apparent at the end of August.

An increasingly hapless-looking Cowen emerged from his summer holiday to face a gathering financial and political storm.

The budget was brought forward to October 14 to deal with an estimated 10-billion-euro shortfall in public finances.

With the country officially in recession, Finance Minister Brian Lenihan sparked the largest, and angriest, protests since labour unrest in Ireland in the 1970s with his austerity budget.

The biggest shocker for the public was the introduction of means- testing for the medical card for people older than 70. There was an emotional national outcry and a demonstration of 15,000 elderly people outside government buildings in Dublin.

The old and infirm taking to the streets did not look good and the government climbed down quicker than you could say universal healthcare for the over-70s.

Education cutbacks also caused a great deal of controversy, with tens of thousands participating in demonstrations in November.

The government has not caved in on these cutbacks so far, despite mounting public anger amid scandals about wanton waste of public resources during the boom years.

The government's bold efforts to save the banking system by guaranteeing it to the tune of 400 billion euros in September have had little effect and mergers are expected amongst the major Irish banks, which are owed an estimated 100 billion euros by the construction industry.

Accusations of having blown the boom have stuck and the ruling Fianna Fail party's popularity is at its lowest ebb.

Another party, the Progressive Democrats (PDs), whose low taxation, pro-business policies were viewed as being partially responsible for the boom, reached its nadir in November when it voted to wind up the party.

The party was "no longer politically viable," it said.

Despite the preponderance of bad news, commentators would do well to refrain from using the phrase "annus horribilis" about 2008 in Ireland. It may be needed in 2009 when employment is expected to increase further to 8 per cent with no signs of an Irish economic recovery.

Meanwhile in Northern Ireland, the announcement of charismatic, Protestant Democratic Unionist Party (DUP) leader Ian Paisley on March 8 that he would step down in May meant a deterioration of the teething problems suffered by the power-sharing administration, the Northern Ireland Assembly.

The less convivial relationship between Paisley's successor Peter Robinson and Sinn Fein's Martin McGuinness, his deputy, meant that executive meetings were suspended over a disagreement on the transfer of policing and justice powers to the executive and the Northern Ireland Assembly from the British government.

But November brought the much-needed good news that, after five months of stalemate, the main parties in the power-sharing government agreed on a deal mapping out the road ahead for a completion of Northern Ireland's peace process. (dpa)

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