Ireland is caught between a rock and hard place - no doubt.
Since 1996 it has benefited from the gift of unprecedented - by Irish standards - economic growth fueled by a number of external factors. These included the ever generous European Economic Community (EEC) who - literally - paved the way for Ireland's economic boom. In addition, the United States following up on its promises after the ratification of the Good Friday Agreement, aggressively supported investment in Ireland, North and South. U.S. firms availed of the 12.5% corporate tax rate and start-up incentives offered by the Irish Government through their investment seeking body, the Industrial Development Authority. As a result Ireland, not so much boomed, as caught up with the rest of the western world.
The country is still a recipient of EEC largess and is very much an active part of the Union. Which is a good thing, as its monetary umbilical cord to the Euro currency is the only thing keeping Ireland from sliding into the financial abyss of national bankruptcy, after Iceland.
Ireland's favorable corporate tax rate has been a reliable source of national income from resident U.S. corporations, supported by the U.S. tax laws that allowed them to avail of the benefit. That loophole in the U.S. tax laws threatens to snap shut soon. With that will disappear considerable investment and ancillary services - private and governmental.
As a business center - tax incentives aside - Ireland has a number of disadvantages.
It is geographically isolated, lying as it does two seas away from mainland Europe. Its workforce, while English speaking and educated, has become expensive and has developed a spirit of entitlement unwarranted in today's economic climate. For example, foreign firms wanting to leave Ireland are obliged to provide generous layoff incentives to workers; incentives unheard of in the United States.
The cost of property in Ireland, currently on a steep downward slope, is still expensive considering what you are purchasing and where. The cost of living is high as are personal and sales (value added) taxes. Evidence of mutual and unethical economic back-scratching between politicians and businessmen in this small country has come to light lately. The weather is unpredictable and it's dark at least three months of the year. Irish ethnic alcoholism, while accepted as normal in Ireland, is an unadvertised board room concern for many foreign manufacturing entities when choosing a location for a new plant. Finally, Ireland's physical infrastructure is not developed to its fullest potential to facilitate timely and cost effective transportation from areas remote from Dublin.
Ireland backed itself into this corner starting back in the late 1960's and 1970's when plans for economic growth were being developed. The diplomatic intelligentsia at the time (and since) was determined that Ireland would become an industrial base mimicking other European partners. Unfortunately national realities did not match this grandiose ambition as Ireland was unprepared for it, being largely a dairy-focused agrarian society and lacking any kind of developed commercial infrastructure. The industrial revolution had completely bypassed Ireland and sustainable indigenous industries were few and far between.
Back to the present day, a review of current events in Ireland - the alleged wanton plundering of banks assets by their directors and shareholders, the overextension of credit, the commercial and political cronyism, the squandering of public funds and trust by the government - has demonstrated loud and clear that Ireland was not ready to play in the big business leagues. It may have been too much too soon.
To the Irish public's dismay, the sinners - referred to locally as the 'golden circle' - are going unpunished; the suspects flagrantly continue their lifestyles, seemingly unconcerned with any consequences of their actions. This in itself speaks volumes about the inherent narcissism in play. Indeed there has been a call (by this publication) for European Union intervention - by their Fraud Unit - to ensure an impartial investigation of alleged financial and policy misdeeds perpetrated by a combination of pivotal business and political leaders.
So much for the bad news; what does the future have in store for Ireland?
Large scale emigration has started to pick up again as those with ambition once again seek opportunity farther afield. Ireland's past expectation of achieving visa preferences in the U.S. will be met with limited success. During its brief heyday, in full expectation of continued growth, the Irish arrogantly - some would say selfishly - slammed the door shut to immigrants seeking residence and citizenship in Ireland. This included removing the right of automatic citizenship to children born in Ireland to foreign parents. This is a privilege that the Irish have enjoyed and relied on for centuries in the United States and elsewhere.
Ireland, barring the finding of a Saudi-size oil field or a massive diamond mine, has a future in its only natural resource - tourism. The country as enjoyed a steady flow of tourist income for decades. It is a national resource that begs to be developed and promises to provide untold opportunity if managed properly. The key is to wholeheartedly embrace the industry and put the idea that Ireland deserves better than tourism as an economic mainstay to rest.
To see the benefits, take Florida as an example. Despite its relatively large, diverse population of 18 million and difficult geography, the State's main income source is sales tax fueled by tourist dollars. Florida residents pay no state income taxes. True, it has year round sunshine. True, is has miles and miles of sandy beaches, Disney and the Everglades. Its sources of income are vacationing sun-seeking tourists, families and conventions.
Ireland has massive potential for tourist development in its own unique niche. Steeped in history the country screams culture and it is near impossible to throw a stone and not hit something of historic significance. The source of tourists? The U.S. alone has 40 million citizens who claim Irish lineage, many of whom would like nothing else than to affordably visit the land of their ancestry. If Ireland takes the tack of attracting repeat tourism (avoiding old habits of ripping-off visitors), there-in lays a spigot of prosperity for this unique country. It doesn't require that Irish citizens parade about in period or leprechaun costumes (although that might help), the Irish are among the best sources of entertainment, intelligent conversation and hospitality in the world; priceless accoutrements in a well-marketed tourist economy.
This time around its most important to remember not to kill the goose that lays those golden eggs.
Evin Daly is a journalist and publisher of [http://www.butlerreport.com] (World News Update)
