ABC News’ Karen Travers reports:
Amidst the shamrocks, Guinness and corned beef, and general merriment of St. Patrick’s Day at the White House and on Capitol Hill today, the visit by Ireland’s new prime minister is also a critical outreach mission.
Irish Taoiseach Enda Kenny has been in power for less than two weeks. But his trip to Washington this week is significant back in Dublin because it is essentially a sales pitch.
The new Irish government wants to reassure American businesses that it’s still okay to invest in Ireland, despite the fact that the economy is practically on the brink of collapse and the Irish may have to raise their once-very friendly corporate taxes in order to pay off the massive bailouts they received from the European Union.
Kenny is the leader of the center-right political party, Fine Gael, which brokered a coalition government agreement with the center-left Labour party earlier this month. Fine Gael, Labour and the more hard line nationalist/liberal Sinn Fein party won a record numbers of seats in a national election in late February – in fact some reports say that this is the first time in Irish history that the Left holds the majority of seats in the government.
The February election was a disaster for the center (but relatively conservative, pro-business) party, Fianna Fail, led by the last Prime Minister Brian Cowen. Cowen was a staple at the Washington DC St. Patrick’s Day celebrations over the last several years and made the headlines last year when Biden wished for blessings for his late mother – who was not actually deceased.
Cowen became the fall guy for Ireland’s economic woes. Irish voters blamed the prime minister and his Fianna Fail party for the collapse of the nation’s banks, the staggering debt, government corruption – you name it, they pinned it on Cowen and Fianna Fail.
But the Irish finger pointing was not unfounded. The story of the collapse of the nation’s banks is quite a tale, one best told by Michael Lewis, the author of “Moneyball” and “The Big Short,” which lookeda t the housing crisis here in the United States.
In this month’s Vanity Fair, Lewis turns his astute eye to the Irish financial meltdown, in an article appropriately titled “When Irish Eyes are Crying.”
Lewis takes the complex story of Ireland’s banking system and the recent crash and puts it into plain English, explaining how a nation that had risen so far in the last 15 years on the strength of its booming economy (dubbed the “Celtic Tiger”) could be completed bamboozled by their government and top bankers.
Part of it, Lewis explains, is the optimism that the Irish people had during such booming times – they just never thought the economy would collapse and trusted their leaders when they said they were on top of the potential problems. But it was all just too good to be true and the naysayers – the Irish economists and professors who predicted this disastrous collapse — were shushed, mocked and essentially called traitors.
“An Irish economist named Morgan Kelly, whose estimates of Irish bank losses have been the most prescient, made a back-of-the-envelope calculation that puts the losses of all Irish banks at roughly 106 billion euros. (Think $10 trillion.) At the rate money currently flows into the Irish treasury, Irish bank losses alone would absorb every penny of Irish taxes for at least the next three years,” Lewis writes.
Lewis notes that for the first time in 15 years, Irish are leaving the Emerald Isle. “In late 2006, the unemployment rate stood at a bit more than 4 percent; now it’s 14 percent and climbing toward rates not experienced since the mid-1980s,” he writes. “The Irish budget deficit—which three years ago was a surplus—is now 32 percent of its G.D.P., the highest by far in the history of the Eurozone.”
These are staggering numbers for such a small, and until recently very poor, nation.
So while everyone today will toast the strong ties between the United States and Ireland, the mission of the Irish Prime Minister is about more than just sharing a pint and a bowl of shamrocks.