International

This week a number of papers carried descriptions of the consequences of the draconian austerity policies of the Irish government: if they began by chopping here and there, they've now gone way beyond that. Mass unemployment, the population fleeing the country and negative economic 'growth' of -7.5%. And so Ireland is entering a vicious circle as a direct result of cutbacks which have had no impact on the budget deficit, because the economy, through these same cuts, is in a state of collapse. A responsible budget policy is fine, but too many cutbacks lead to a great deal of suffering. Perhaps parties in the Netherlands which want to see a hard policy of austerity, such as the right-wing VVD and CDA, should take note of this.

The Irish tricolour

In the 1990s, Ireland was known as the Celtic tiger. By means of a lowering of corporation taxes to 12,5%, Ireland suddenly became, instead of a primarily agrarian country with a sideline in tourism, attractive to companies as a place of establishment. But in the meantime government incomes fell: taxes on new companies failed to balance the loss of income from general taxation. Ireland had been able to take this gamble because it had profited greatly from European funds. In itself there was nothing amiss here, because Ireland was one of Europe's poorest countries. It had never, however, been the intention that the normal income of a state, such as through taxes on companies, should dry up and be compensated by European moneys.

And then came the bank crisis. Ireland had, in the period running up to this, become extremely dependent on trade in immovable goods, and when the housing market collapsed, Ireland saw the same phenomenon unfold as did the United States: banks lost their credit-worthiness and the government had to take over billions in low-value loans.

As a result the Irish state finds itself in enormous debt. The Irish government immediately - and well before other EU member states - imposed draconian cutbacks. In the civil service, in unemployment benefits, in state investments in, for example, transport, and so on. All of this sounds familiar: precisely the plans now put forward by the various right wing parties here in the Netherlands.

The results are disastrous: everyone capable of doing so, with well-educated young people in the forefront, is emigrating. Ireland is thus losing the very people who could have done most to help their country. And those who cannot or don't want to emigrate are finding life ever harder: if you own a house, the price will have gone through the floor; social security payments have fallen rapidly; and work is almost impossible to find. And so Ireland is becoming once again a country full of poverty, a position from which it had, during the foregoing fifteen years, wrested itself.

This is an example to Europe, but also a warning for the Netherlands. Of course the Dutch government should follow a sound budgetary policy, but cutting spending too quickly can have precisely the opposite effect. The SP has thus once again been proved correct: a well-considered, measured policy of spending cuts that neither increased poverty nor undermined state investments would be a sound economic policy.