‘Conned’: a German view of Ireland
Last week, the German newspaper ‘Süddeutsche Zeitung’ published an article about the ‘conning’ of Ireland – over several decades – by its political masters. We talk to the writer, reprint the article and add some footnotes of our own
Christian Zaschke’s article in Süddeutsche Zeitung last week, which claimed that Ireland’s political elite had failed its people, not least over oil rights,
Christian Zaschke: “I realised that the Irish rebel instinct isn’t as pronounced and that it is matched with a kind of lethargy, a certain fatalism as well as melancholy”
A road sign painted with graffiti stands outside the village of Rossport, Co Mayo. Photograph: Reuters
Original introduction: Chancellor Merkel has “contempt” for Ireland’s bankers. But they are just one part of an elite that exploits the island shamelessly
Anyone who wants to understand why Ireland could be so rich yet will probably remain poor should learn about Ray Burke. In Ireland, Ray Burke is almost as well known as James Joyce, Samuel Beckett or the U2 singer Bono who, in his sunglasses, always looks like a pudgy fly. People in Ireland don’t have positive thoughts about Ray Burke. After all, he sold their future.
Ireland has been trapped in a never-ending crisis since its gigantic property bubble burst. The banks, above all Anglo Irish Bank, worked ceaselessly to pump fresh money into the already overheated property market – which finally collapsed with the outbreak of the financial crisis of 2008.
The ruined Anglo Irish Bank has just made headlines posthumously after the Irish Independent published transcripts of telephone calls from September 2008. On the tapes you can hear how high-ranking bankers make fun of the crisis. The €7 billion emergency assistance that they demanded from the government would be paid back when they have the money, the bankers agree jokingly – “in other words: never”. That money won’t be enough anyway, says one department head, as he pulled the €7 billion figure “out of my arse”.
The journalist and author Fintan O’Toole says: “The reaction here in Dublin is very interesting. Hearing directly [the bankers’]boundless contempt is shocking. And everyone knows: we are paying for what they left behind.”
In a now legendary all-night sitting on September 29th, 2008 the Irish government agreed to guarantee all bank debts. O’Toole calls this the “most disastrous decision that was ever made by an Irish government”. At least two generations of taxpayers will pay off these debts. O’Toole makes an excellent job of charting the Irish path to disaster in his book Ship of Fools, in which he calls the accounts of Anglo Irish Bank the “most inventive work of Irish fiction since Ulysses”.
The oil off the Irish coast could be the way out of this misery. The oil could be the hope. If the former energy minister Ray Burke hadn’t rewritten the relevant laws as though the oil industry itself held the pen. And if Bertie Ahern hadn’t made an already bad deal for the Irish people even worse.
Burke was energy minister in 1987, when it was decided to change the provisions for oil and grass drilling licence allocation. Until then the state owned 50 per cent of all oil and gas found in Irish waters. In addition, companies had to pay royalties of between 8 and 16 per cent as well as 50 per cent tax. (1, see notes below)
The new rule gave companies 100 per cent of their find and abolished licence fees. In 1992 Bertie Ahern, then finance minister and later prime minister from 1998 to 2008, cut the tax for oil companies to 25 per cent – a provision that remains to this day. (2)
Increasing numbers of Irish people no longer accept this. For instance, the fisherman Joey Murtagh. Standing on the edge of Dublin Bay, with a glorious view over the Irish Sea, he asks: “You know what Ray Burke did?”
Or the psychologist Aisling Murphy. She sits in Dalkey in a pub called The Queen’s, where chicken and tacos are today’s special. Murphy asks: “You know what Ray Burke brought on us?”
The financial adviser Eddie Hobbs has arranged to meet at the motorway restaurant Brown’s Barn, 15km south of Dublin. He asks: “You’re aware of Ray Burke?”
Burke was always surrounded by corruption allegations and went to prison in 2005 because of tax fraud.
The reason this political inheritance is causing such animated discussion now is because of huge oil and gas reserves believed to surround the island. The company Providence estimates the volume of oil it discovered in the Barryroe field, south of Cork, at over 1.7 billion barrels, of which at least 270 million can be pumped. Further test drillings in Irish waters have been similarly promising.
At the moment a barrel of oil costs, depending on grade, between $90 and $100, meaning there could be oil worth many billions of euro in the Irish sea bed. (3) Even the oil companies concede that Ireland is surrounded by massive riches. But the Irish will probably gain none of this thanks to men like Ray Burke and Bertie Ahern.
Screwed over again
Murtagh says: “We are being screwed over again with every trick in the book.” Murphy: “We are a land that lies still while we are bled dry.” Hobbs: “The oil companies won’t succeed on this front. Not this time.” O’Toole: “Under the current conditions, it would be better if the resources stayed in the ground.”
But they aren’t staying there.
In April the American oil giant ExxonMobil began test drillings in the Dunquin Field southwest of Ireland. Off the west coast, Shell is extracting gas from the Corrib field, a source of often violent confrontations with residents for many years.
Two weeks ago the current energy minister Pat Rabbitte urged representatives of 70 companies to invest in gas and oil extraction in Ireland. He said: “It is a priority of the Government to encourage investment in oil and gas extraction off the Irish coast and to optimise the value of the discoveries for Ireland.”
Only the Government isn’t making much progress with the optimisation. In May 2012 an Oireachtas committee appointed by Minister Rabbitte presented a report. After examining the rules introduced by Burke and Ahern, they came to the conclusion that it would be better to leave everything as it is.
Oil companies could scarcely find better terms than in Ireland. In most oil- and gas-producing countries in the world the state taps on average 70 per cent of the profits. In Ireland there is just the 25 per cent tax, though this can rise to 40 per cent on particularly rich fields. But Irish rules allow companies to write off all costs for test drillings over 25 years, regardless of where they were carried out, meaning the Irish State ends up with considerably less than 25 per cent.