In the thirty years after 1970 the economy and society of the Republic underwent a radical transformation that would have, as one of its unintended consequences, the effect of making a historic compromise between the main political traditions on the island a real possibility. The prerequisite for this shift was the Lemass–Whitaker policy watershed in 1958–9 and the subsequent role of the state in the promotion of an export-orientated development strategy and the attraction of foreign direct investment. The structure of employment was transformed. The number at work in agriculture continued its long-term decline and the share of agricultural employment fell from 26 per cent in 1971 to just over 11 per cent in 1995. By 1996 the numbers at work in agriculture had fallen to 136,000, representing a decline of 50 per cent over the twenty-five years since 1971.1
The Republic was one of the few EEC countries in which manufacturing employment did not shrink drastically during the 1970s and 1980s. By 1977 the Republic had caught up with the North in terms of manufacturing output per head, and by 1984 it was 60 per cent higher. In the 1980s, while Northern Ireland was labelled a stagnant ‘workhouse economy’, with growth in manufacturing output averaging 0.1 per cent per annum, the Republic's rate of growth was 6 per cent per annum.2 This impressive performance, together with a substantial expansion of the public sector, made the two decades after 1960 a period of unprecedented economic expansion and material improvements, particularly in comparison with the bleak and stagnant 1950s. GDP grew at 4 per cent per annum and real personal disposable income more than doubled by 1980.3
This improvement in economic performance was largely dependent on the growing number of branch plants of foreign companies attracted to the Republic by an extremely favourable tax regime and relatively low wages. By 1980 foreign-owned firms, predominantly from the USA but with strong representation from other European countries, accounted for one third of employment in the manufacturing sector and 70 per cent of exports of manufactured goods.4
The Lynch government's White Paper of January 1972, which presented the case for membership of the EEC, had predicted that any jobs lost in the traditional sectors would be more than compensated for by the additional employment created by foreign investment attracted to Ireland by the prospect of access to the wider EEC market.5 This proved over-optimistic. By 1980 imports accounted for almost two thirds of the sales of manufactured goods, compared to about a third in 1960. The IDA could point to the development of the foreign-controlled electronics sector, which more than doubled its workforce in the decade after 1973. But in the same period employment in the traditional industries of clothing, textiles and footwear declined by 40 per cent.6
Such problems were exacerbated by the more unstable international economic environment in the 1970s and 1980s. The fivefold increase in oil prices after the 1973 Yom Kippur War pushed up inflation and exercised a deflationary effect on demand in oil-importing countries. It had a particularly strong impact on the Republic, which was almost entirely dependent on imported energy sources. A fresh surge in oil prices in 1979 helped to precipitate a major international recession. This reduced the amount of internationally mobile investment at a time when Ireland was experiencing increased competition for foreign capital. The development since the 1960s of a number of low-wage, newly industrializing countries as potential sites for investment, combined with rising labour costs, eroded Ireland's attractiveness. Its pull as a low-wage export platform for US firms wanting access to the EEC had been undermined by the accessions of Greece, Portugal and Spain.
This deterioration in the international environment occurred at a time when demographic changes were putting increasing pressure on the economy's job-creating capacity. The census of 1971 registered the first increase in the population for the twenty-six counties since partition, and this trend was maintained through 1981, when the census showed an annual rate of increase of 14.4 per 1,000, compared with 5.5 during the 1960s. The improved economic conditions of the 1960s and early 1970s encouraged more people to remain in the country, and former emigrants and their children also began to return to Ireland, resulting in a net immigration figure of 100,000 for the 1970s. A late Irish baby boom was another by-product of economic optimism that weakened the unique Irish pattern of very late marriage.7 Ireland's rate of natural increase was six times the EEC average during the 1970s, and by the beginning of the 1980s the Irish birth-rate of 21 per 1,000 was far in excess of the European average of twelve.8 By the end of the 1970s it was calculated that 20,000 new jobs a year were needed just to deal with new entrants to the labour force. This compared with the annual average of 17,200 new jobs created during the decade.9
The initial response of Fianna Fáil to the signs of deteriorating conditions was to maintain the optimistic assumption of the 1960s that the economic problems would be solved by a new and long-lasting expansion, which it was the responsibility of the state to kick-start. George Colley, who had replaced Haughey as Minister for Finance after the Arms Crisis, ignored the warning of T. K. Whitaker, now Governor of the Central Bank and, despite the existence of rising inflation, made a radical departure from financial orthodoxy in his budget of 1972 by running a deficit on current account. His justifications were that the economy was running well below capacity, that unemployment was high and that ‘economic buoyancy’ was needed to deal with the demands of adaptation to EEC membership. These arguments were unlikely to be contested by the Labour Party.
More surprising was Fine Gael's enthusiastic endorsement of the new principle.10 Although the party had been rescued from its dire condition in the 1940s by the experience of coalition government, the radical shift in Fianna Fáil's economic policies had removed one of the party's main areas of policy distinctiveness. Lemass's proclaimed desire for a more positive engagement with the North had a similar effect. The departure from the scene of increasing numbers of politicians from the Civil War generation raised fundamental questions for a party that seemed to have increasingly little left to define it, apart from a widespread perception that it existed to defend the interests of big farmers, merchants and professionals. This unfavourable image was exacerbated by the part-time and often amateurish ethos of many of its TDs.
When de Valera retired, Fine Gael's leadership was still an uneasy duopoly, with Richard Mulcahy as President of the party in the country and John A. Costello as leader in the Dáil when his busy professional life as a barrister permitted. When Mulcahy retired in 1959, a majority of the party in the Dáil rebuffed Costello's plea that he should now combine the two roles while maintaining his legal practice, and James Dillon was elected leader. Dillon had been a critic of the many part-timers in the upper reaches of the parliamentary party and favoured a modernized and professional party organization. However, his modernizing ideas did not extend much beyond party organization. He favoured moving Ireland from isolation towards what he referred to as a ‘White Commonwealth Alliance’ with Britain, the USA, Canada and the other dominions. He also favoured membership of the EEC, which, its critics claimed, would ultimately involve the Republic in some sort of military alliance. At one with Lemass on the issue of Europe, on issues of economic and social policy he was, as an American diplomat put it, ‘cast in an Edwardian mould’.11 He was ideologically and temperamentally out of tune with the Lemassian themes of industrial development and the need for planning. His position as Minister for Agriculture in both the inter-party governments reflected his deep, almost philosophical conviction that agriculture would always be Ireland's prime source of wealth and his scepticism about whether a country with few natural resources for industrial development could entertain the ambitious vistas set out by Lemass. He was also resolutely pre-Keynesian in his views on the role of the state in the economy and of anything that smacked of the welfare state or ‘socialism’.
Dillon's leadership was seen as damagingly conservative by an influential group of younger party members led by Declan Costello. Like his leading acolyte, Garret FitzGerald, Costello was a son of the party's aristocracy: his father was a former Taoiseach, while FitzGerald's had been Minister for External Affairs in the first Cumann na nGaedheal government. Costello was one of that rare breed: an intellectual in Dáil politics. He had created the Fine Gael Research and Information Centre in 1957, and through it and the National Observer, a newspaper that he had founded, he promoted the idea that Fine Gael needed a new, left-of-centre identity.12 Fine Gael's defeat in two by-elections in 1964 weakened Dillon's capacity to resist the left, and Costello was able to persuade the Fine Gael parliamentary party to adopt a resolution supporting a ‘more just social order’ and ‘a more equitable distribution of the nation's wealth’.13 The party accepted ‘Costello's proposals, which he embodied in what he termed the ‘Just Society’ programme, as policy during the 1965 general election campaign. It upstaged Fianna Fáil with its proposals for a new Department of Economic Affairs, an incomes policy, state control of the credit policies of the commercial banks, and a social development strategy to complement economic modernization with a free medical service and higher spending on housing and education.
Although the ‘Just Society’ caught the popular imagination, especially among younger voters, there remained a fundamental question mark over the extent and the depth of the party's commitment to Costello's philosophy. Dillon assured journalists on the day the ‘Just Society’ document was published that Fine Gael remained ‘a party of private enterprise’, and many in the party would have agreed with Senator E. A. McGuire, the owner of Brown Thomas, Dublin's major department store, that Costello's proposals were ‘pure socialism of the most dictatorial kind’.14
If radical policies demanded a radical leader, then Dillon's successor was an undoubted improvement. Liam Cosgrave, son of W. T. Cosgrave, had played an important role in the process by which the party had adopted the ‘Just Society’ programme. At the same time he was trusted by many of the party traditionalists because of his strongly conservative views on moral issues and his identification with the classically Fine Gael values of law and order and the defence of the institutions of the state against any subversive threats.
Cosgrave's support for Costello's proposals reflected not any left-of-centre disposition but his strong belief that they would provide a more coherent basis for cooperation with the Labour Party in order to displace Fianna Fáil from power. He was prepared to be radical in the pursuit of this goal and had even proposed a merger of the two parties in 1968, which had been rejected by Labour's leader, Brendan Corish, as had Cosgrave's suggestion of a pre-election pact between Fine Gael and Labour in 1969.15 Labour's failure to make an electoral breakthrough in 1969 put an end to the go-it-alone strategy. Visions of the 1970s as being socialist gave way to a more realistic assessment that, together with the ‘social democratic’ element of Fine Gael, Labour in coalition could make a real difference to the lives of its working-class supporters.
The 1969 election had produced an important shift in the balance between pro– and anti-coalitionists in the party. Traditionally it had been the rural deputies who were strongly in favour of coalition, while those from urban areas, particularly Dublin, tended towards a rejectionist position based on socialist principles. The 1969 election had brought in a group of new Dublin deputies, including Conor Cruise O'Brien and Justin Keating, who combined an impressive amount of intellectual firepower with the conviction that ‘principled socialist opposition’ was a recipe for impotence. The Arms Crisis and its revelation of the links between sections of Fianna Fáil and the Provisionals added the argument that the two main opposition parties had a national duty to provide a stable and democratic alternative to Fianna Fáil. A special delegate conference held in Cork in December 1970 allowed the leadership to complete what Conor Cruise O'Brien called ‘Operation Houdini’ by voting to allow the leader and the members of the Parliamentary Labour Party to make the decision to go into coalition when they were convinced this would allow the implementation of Labour's policies.16 This was more than enough latitude for a parliamentary party that, with the exception of Noel Browne, was determined to get into government at the earliest opportunity.
When Jack Lynch dissolved the Dáil in February 1973, Labour and Fine Gael hastily concluded a coalition agreement and issued a joint fourteen-point programme that contained few specific promises and that Labour's historian described as ‘consisting largely of platitudes’.17 Due to the success of vote transfers between the two parties, Labour won an extra seat, although it had lost votes compared to 1969, particularly in Dublin, where anti-coalition supporters transferred to Official Sinn Féin, which had fought the election on a fairly left-wing set of policies. But it was Fine Gael who benefited most from the transfer pact, gaining four seats. Thus, despite the fact that Fianna Fáil increased its share of the vote slightly on 1969, it lost the election, and the two opposition parties were able to form a stable coalition government.18
To many observers the most remarkable thing about the National Coalition was its unity. It faced economic problems and challenges on the security and Northern Ireland fronts that were far greater than those that the previous inter-party governments had had to endure. Key to this unity was the absence of any major divisions on left–right lines between Labour and Fine Gael members of the government. Much of the credit for this must go to Liam Cosgrave, who from his initial decision to offer Labour five ministries – one more than their electoral performance strictly warranted – had operated as a considerate and fair chairman of government meetings.19 However, it also reflected the fact that the Labour ministers did little to put a distinctive imprint on the key areas of domestic policy during their time in office.
As Tánaiste and Minister for Health and Social Welfare, Brendan Corish at sixty was running out of steam and lacked the inclination or time to give direction to his colleagues. Three of them were particularly forceful personalities: Justin Keating at Industry and Commerce, Conor Cruise O'Brien at Posts and Telegraphs, and Michael O'Leary at Labour. They had their own departmental agendas and, in the case of Keating and O'Leary, leadership ambitions that took priority over any notion of a common Labour strategy. This would, in any case, not have been easy to develop, given the buffeting that the Irish economy was receiving from the end of 1974. The 1973 manifesto had promised that a ‘programme of planned economic development’ would be a central feature of the government's policy and that an immediate aim was a stabilization of prices, a halt in redundancies and a reduction of unemployment. The fivefold increase in oil prices removed any possibility of these ambitions being realized. Prices rose by about 90 per cent during the first four years of the coalition's term, an average rate almost twice that experienced during the previous four years of Lynch's government. The combined effect of freer trade and recession caused many firms to cease production or cut their workforces. The number of unemployed rose from 71,435 when the coalition took power in March 1973 to 115,942 four years later, or from 7.9 per cent to 12.5 per cent of the insured labour force.20
These dismal figures undermined any possible electoral benefit Labour might have had from the achievements of the coalition in the areas of social expenditure and taxation. Expenditure on social welfare rose from 6.5 per cent of GNP in 1973 to 10.5 per cent four years later and most benefit rates rose by 125 per cent, considerably more than wages and prices. The rate of house building increased by 50 per cent and expenditure on health services increased almost threefold.21 Taxation was an area in which Fine Gael's left made common cause with Labour. The election manifesto had committed the coalition to a wealth tax, and Garret FitzGerald, who was a member of the cabinet's economic subcommittee, supported his Labour colleagues on the need for taxation of capital gains and wealth.22 A White Paper published in February 1974 proposed a capital gains tax of 35 per cent and an annual wealth tax on estates of over £40,000. In an attempt to lessen criticism from the large propertied and middle-class element in Fine Gael's traditional support, death duties were to be abolished. The intensity of the reaction to the proposed taxes on capital gains and wealth, led in the Dáil by the only recently rehabilitated Charles Haughey, resulted in the introduction of a higher threshold of £100,000 and a lower rate of 1 per cent. Such redistributive policies alienated the middle class, while their only marginal contribution to the public purse did little to compensate Labour's working-class supporters, many of whom experienced a real drop in their living standards in the last two years of the coalition. Labour's presence in government had made it easier for the leadership of the Irish trade union movement to be persuaded of the need for ‘responsible’ wage demands. Real pre-tax incomes rose in 1974 and 1975, but then National Wage Agreements were amended to introduce pay curbs, which, together with a heavily regressive tax system, led to a squeeze on working-class living standards.23
The apparent lack of division within the coalition on the economy, the issue that would lose them the election in 1977, was in contrast to the open tensions over how best to deal with the reverberations of the northern conflict. Cosgrave, along with Conor Cruise O'Brien, had favoured a low-key approach to Northern Ireland, aimed at a largely internal power-sharing deal between the Ulster Unionists and the SDLP. Garret FitzGerald had been appointed to Foreign Affairs by Cosgrave, who had an uneasy relationship with his voluble and super-confident colleague and had hoped that the many ramifications of EEC membership would result in the minister spending a lot of time out of the country. This ignored FitzGerald's formidable energy and his conviction that having a mother from a northern Presbyterian background gave him a particular insight into the mentalities of both communities in the North.
FitzGerald soon assumed a key role in Northern Ireland policy and used it to support the more activist policies favoured by John Hume. O'Brien, who was an increasingly scathing critic of the conventional Irish nationalist analysis of Northern Ireland, was kept on as Labour Party spokesman on Northern Ireland and at Sunningdale tried in vain to argue for a deal more palatable to Faulkner's supporters. After the UWC strike he became the first Irish government minister to state publicly that he was not working actively for Irish unity, as it was not a practicable goal. In a document prepared for his party colleagues and leaked to the press, he argued that to prevent a ‘doomsday situation’ in the North the government in Dublin should adopt a relatively low profile.24 In fact, the UWC strike's success had forced the Irish government to pay more attention to O'Brien's analysis. Concerned that Harold Wilson might be considering a unilateral British withdrawal, the government established an inter-departmental unit to plan for such a scenario. It warned that British withdrawal would not lead to a united Ireland but to a loyalist-dominated independent state, and that the best that could be hoped for was some form of repartition following inter-communal violence.25
O'Brien was criticized at the time and since for an unbalanced approach that demanded from Irish nationalists an intellectual maturity and generosity of spirit that he never demanded from unionists.26 Yet it was precisely O'Brien's point that much of the rigidity, lack of imagination and simple bigotry associated with the unionist cause was a result of nationalism's refusal to accept that there could be any democratic validity to partition. He was convinced that reform in the North and better North–South relations were a real possibility if the unity issue were put to one side. This inevitably meant that he concentrated his attentions on those best placed to unlock this progressive potential in the North by abandoning positions that, no matter how appealing in Dublin, strengthened the hands of the most reactionary opponents of change in Belfast.
O'Brien's most vociferous critics were within his own party. Justin Keating was in the forefront of those wedded to the republican socialist mantras of James Connolly, demanding British withdrawal at a time when the North was as near to a sectarian civil war as at any time since the 1920–22 period. Anti-partitionists were soon joined in the ranks of critics of ‘The Cruiser’ by civil liberties groups and a substantial sector of the Dublin print and broadcast media as O'Brien and Cosgrave became identified with a heavy-handed approach to the activities of the IRA in the South.
Cosgrave had outraged his more liberal colleagues and threatened to split the Fine Gael parliamentary party when, in December 1972, he had indicated that he would support Fianna Fáil amendment to the Offences against the State Act, which allowed the indictment by a senior police officer of those suspected to be terrorists. The explosion of two bombs in the centre of Dublin, killing two people and injuring over a hundred, which was probably the work of loyalist terrorists, led to the withdrawal of Fine Gael's opposition to the amendment and saved Cosgrave's leadership. However, his government was soon faced with intensifying and often sickening reminders that neither republicans nor loyalists would respect the border when the exigencies of the ‘war’ in Northern Ireland demanded it.
Within a fortnight of the coalition coming into office, the Claudia, a fishing boat filled with an IRA arms shipment and with the senior Belfast IRA man Joe Cahill on board, was captured off the Waterford coast as a result of joint British–Irish intelligence work. Over the next two decades the IRA's ‘southern command’ would use the Republic as the major location for its arms dumps, for the training of its ‘volunteers’, and as a source of funds through bank robberies, kidnappings and other forms of extortion. In the autumn of 1973 all the members of the government were informed that they and their families were under direct threat of kidnapping by one or other of the republican groups. In 1975 the Dutch businessman Tiede Herrema was taken by the IRA, which demanded the release of its prisoners in Irish jails. The government refused to negotiate. As Conor Cruise O'Brien puts it in his account of the coalition, ‘We and Herrema got lucky’: police interrogation of a suspected member of the gang revealed where the victim was being held and he was released without physical harm.27 Others were less fortunate. In March 1974 a Fine Gael Senator, Billy Fox, was visiting his fiancée in the border county of Monaghan when he was shot dead by the Provisionals. Fox, like the family he was visiting, was a Presbyterian, and the motive for the murder was apparently sectarian.28 Although the IRA had attempted to deny its involvement in Fox's murder, it openly admitted responsibility for the murder of the British Ambassador, Christopher Ewart-Biggs, whose car was blown up by a landmine near his official residence on the outskirts of Dublin on 23 July 1976.
The Dáil was recalled for a special emergency sitting, and Cosgrave proposed a state of national emergency with a substantial increase in the powers of the state in its ‘anti-subversive’ struggle. A politically embarrassing conflict with the President, Cearbhall Ó Dálaigh, occurred when he referred one of the proposed pieces of legislation to the Supreme Court in September. The Minister for Defence, Paddy Donegan, a strong Cosgrave loyalist, departed from his script in a speech to troops at Mullingar to refer to Ó Dálaigh as a ‘thundering disgrace’, provoking the President's resignation. It is hard not to agree with the journalist Bruce Arnold in his judgement that Cosgrave overreacted to the murder, in part to wrong-foot Fianna Fail with the objective of an early election on the law-and-order issue.29 It is difficult otherwise to explain why similar measures had not been proposed after the appalling atrocity committed by the Ulster Volunteer Force when it exploded car-bombs in the centres of Dublin and Monaghan on 17 May 1974, killing thirty-three people in the worst single loss of life during the ‘Troubles’.
If Cosgrave did have an undeclared electoral agenda, the President's resignation frustrated it and intensified the authoritarian and repressive image of the government. Newspaper reports of police brutality in the interrogation of terrorist suspects by what was described as the ‘Heavy Gang’ were taken so seriously by FitzGerald that he considered pressing for an inquiry and resigning from the government if it were not granted.30 In 1975 O'Brien amended the Broadcasting Authority Act of 1960 to allow the Minister for Posts and Telegraphs to name certain organizations that would be prevented from making broadcasts and from having their members interviewed. Broadcasting by the IRA and Sinn Féin had been effectively banned from the airways since broadcasting began in the state, although neither organization was referred to in the legislation. Now, for the first time, Sinn Féin was named as a proscribed organization, and the resulting furore only enhanced the government's ‘law-and-order’ image.
If, as Garret FitzGerald claims, the coalition lost the 1977 election because ‘the people were tired of us’,31 then what J.J. Lee calls the ‘constipated’ image of Cosgrave, as opposed to the amiability of Jack Lynch, may well have played a role.32 His obvious relish in the fight against subversion, and O'Brien's ‘anti-national’ views on Northern Ireland, have been seen by some analysts as key elements in the coalition's defeat.33 The repressive image of the government may have damaged it amongst younger voters. The voting age had been reduced to eighteen for the first time, and a quarter of the electorate was under twenty-six. The coalition's appeal to this group had been hurt by Cosgrave's decision to vote against his own government's legislation on contraception. This had been prompted by a Supreme Court ruling in the McGee case in December 1973, which declared the ban on the importation of contraceptives under the 1935 Act to be unconstitutional. The government's legislation, which aimed to regularize the situation by allowing chemists to sell contraceptives to married couples, was hardly a charter for promiscuity, but worried a number of Fine Gael TDs with rural seats to defend.34 Cosgrave's vote and a number of other Fine Gael defections killed the bill. Yet, if some younger voters were dismayed by the coalition's failure on contraception, they were hardly likely to turn to Fianna Fáil, which took an unabashedly traditional line on the issue. It is also unlikely that Northern Ireland played much of a role in Cosgrave's defeat. It featured little in the campaign, and if the defeat of Conor Cruise O'Brien was seen by some as a blow struck by the electorate against revisionist views on the North, what then was the significance of Justin Keating's loss of his seat, given his unreconstructed anti-partitionism?
But, while the Irish media's fixation on the repressive and authoritarian features of the coalition and O'Brien's revisionist agenda had little impact on the electorate, it did dent the morale of many of the government's members and contribute to the decision to go to the country in June 1977. This was despite the fact that the government had another six months to run and despite signs that the economy was moving back to rapid growth and inflation was falling.35 Cosgrave was proud of the coalition's ability to hold together for four and a half years, longer than any government since the Emergency, and hopeful that a radical redrawing of constituency boundaries by the Labour Minister for Local Government, James Tully, would damage Fianna Fáil. While the infamous ‘Tullymander’ might have been effective against a moderate swing to the Opposition, what occurred in June 1977 was a massive surge to Lynch's party. For the first time since 1938, Fianna Fail won over 50 per cent of the vote, and their eighty-four seats represented a gain of fifteen. The combined vote for the coalition parties dropped from 49 per cent to 42 per cent and from seventy-three seats to sixty.36
The key to Lynch's success was a sharp turn of working-class voters towards Fianna Fáil. In 1969, 40 per cent of skilled workers voted for Fianna Fáil and 26 per cent for Labour. By 1977 the gap had widened to 54 per cent for Fianna Fail and 11 per cent for Labour.37 Disillusion with the coalition on unemployment and falling incomes was decisive, and it was transformed into a surge of support for Lynch through Fianna Fáil's first ever election manifesto, Action Plan for National Reconstruction, which was the most extravagant and reckless collection of economic pledges ever made in an Irish election. It promised to create 25,000 jobs a year, when the previous average had been around 4,000 a year. Income tax was to be cut and domestic rates abolished along with road tax. First-time house buyers were to receive a grant of £1,000.
Conor Cruise O'Brien has claimed that this audacious programme ‘bore all the hallmarks of C.J. Haughey, now again the rising star of Fianna Fáil.’38 The manifesto, however, was designed to ensure such a margin of victory that Lynch would once and for all be able to put the ‘unconstitutional element’ in the party in its place. In this sense Northern Ireland did play a subtle and subterranean role in the election. Haughey had maintained a strong body of support within the party, and after the collapse of the power-sharing executive and the apparently bleak prospects for further political reform in the North there was an upsurge of traditional anti-partitionist sentiment within Fianna Fáil. Michael O'Kennedy, the party's new spokesman on Northern Ireland, was in awe of Haughey and in March 1975 the party published a distinctly hawkish policy document calling for a British commitment to implement an ‘ordered withdrawal’ from the North.
Haughey's post-1970 public posture of loyalty to the party and his strong performance in the Dáil as a critic of the coalition's wealth tax had led to his return to the opposition front bench in 1975 as spokesman on Health and Social Welfare. He had used his time in the political wilderness to cultivate the party's grass-roots. There was no ‘rubber chicken’ function in a rural backwater that he was not prepared to grace with his presence. Lynch, aware of Haughey's popularity with the party's foot-soldiers, hoped that a major election victory would allow him to re-establish his authority in the party. It was with this in mind that he had asked Martin O'Donoghue, Professor of Economics at Trinity College, to be a candidate in the election and write the sort of expansionist manifesto that would copper-fasten his leadership.39 Against his better economic judgement, O'Donoghue delivered the victory. Unfortunately for Lynch, the influx of new TDs included many who would look to Haughey for the strong leadership deemed necessary when O'Donoghue's strategy appeared to threaten the possibility of national bankruptcy.
The strong passions that Haughey aroused in his opponents and allies have tended to result in a version of the political history of the South in the 1980s that pays too much attention to the role of individuals and not enough to the profound economic problems that the Republic faced. If one individual has to be singled out as responsible for the crisis years of the early 1980s, then it would have to be Jack Lynch. One Irish historian's comment that Lynch ‘stood for nothing in particular except a kind of affable consensus’ has been criticized by J. J. Lee for not recognizing that such a consensus was an achievement if the alternative was the ‘breakdown of civilized discourse or government by the elect instead of the elected’.40 Yet Lynch had displayed severe hesitancy during the Arms Crisis and an unwillingness to confront Haughey and his fellow conspirators until forced to do so by Liam Cosgrave.41 The consensus he prioritized was that which was within Fianna Fáil, and in 1977 he showed a marked inclination to sustain it with an electoral triumph whatever the ultimate economic cost.
This was apparent to some leading members of the party at the time, with Haughey's ally Brian Lenihan commenting on the manifesto, ‘Blessed are the young for they shall inherit the national debt.’42 Martin O'Donoghue was now in the cabinet heading a new Department of Economic Planning and Development. He set out the government's economic strategy in a White Paper, National Development 1977–1980. It was, he admitted, a gamble, relying on a vigorous pump-priming exercise by the state that would create the expansionist environment in which private enterprise would take over, allowing for a reduction in the role of the state and in the level of public expenditure. Two of the basic assumptions underpinning the strategy were dangerously optimistic. One was that the oil price shock of 1973 was a once-and-for-all event and that international economic conditions would continue to recover. The other was that the trade union movement would be prepared to exchange ‘responsible’ wage demands for job creation.
The second large increase in oil prices at the end of 1978 and the consequent deep international recession dealt a severe blow. Growth of GDP, which had averaged 6 per cent in 1977 and 1978, dropped to 1.5 per cent in 1979 and unemployment and redundancies began to increase sharply. Lynch had said that he would resign if the number of unemployed could not be brought below 100,000 – it was 106,000 when the coali-tion left office. In the first two years of the new administration over 60,000 new jobs were created and the number of unemployed had fallen to 90,000 by 1979. It then began to rise and reached 100,000 in 1980. By 1983 it would soar to 200,000, or 16 per cent of the workforce, the highest rate in the EEC.43 The jobs that were created were mostly in a fast-growing public sector and were paid for by a sharp rise in public expenditure financed by government borrowing. By the time Haughey succeeded Lynch as Taoiseach in December 1979, the Exchequer borrowing requirement had doubled and the national debt was more than two thirds higher than when the coalition had left office.44
To imported inflation was added the inflationary effect of trade union wage demands. The 1970s had seen a shift towards more centralized collective bargaining between the ICTU and the employers' organizations through a series of national wage agreements. In the second half of the decade the government began to play a formal role in these negotiations. This culminated in the National Understanding for Economic and Social Development in 1979, aimed at eliciting union restraint on wages in return for government action on a wide range of issues that included health, education, taxation and employment.45 However, the fragmentation of the Republic's trade union movement made it difficult for the ICTU leadership to deliver its members' compliance in wage restraint. In 1978 a plea from the Minister for Finance, George Colley, for a national wage settlement of 5 per cent had little effect as average industrial earnings rose by 17 per cent.46
Wage discipline was made less likely because of an eruption of urban/rural conflict over taxation. The EEC's Common Agricultural Policy (CAP) had provided Irish farmers with a golden harvest. Guaranteed prices and highly favourable price increases caused by substantial devaluations of sterling had brought Irish farmers unprecedented prosperity. By 1978 real incomes in agriculture had doubled compared with 1970.47 The fact that farmers were not subject to income tax seemed increasingly intolerable as more and more urban workers were brought into higher tax brackets because of inflation. The exclusion of farmers from the income tax base of the state, together with a very favourable tax regime for companies, meant that during the 1970s there was a considerable increase in the tax burden for those subject to income tax.48 George Colley had attempted to deal with growing criticism of his government's inaction on farm incomes with a proposal for a 2 per cent levy on farmers’ turnover in his 1979 budget. However, by this time the CAP-induced boom had come to an end. Ireland's decision to join the European Monetary System when it was created in 1978 meant the end of favourable currency movements as the link with sterling was broken. EEC concern with over-production under the CAP led to a reduction in the rapid rate of increase in agricultural prices and ushered in a slump in agriculture. A strong reaction from farmers’ organizations led to the proposed farm levy being dropped. The result was an explosion of protest from trade unionists, who took to the streets in marches and demonstrations for tax equity, culminating in a one-day national strike on 20 March 1979 with 150,000 protesters in Dublin and another 40,000 in Cork. George Colley, who had criticized the strike as ‘unproductive’ on the day before it took place, probably sealed his fate in the forthcoming battle for the leadership of the party.
With unemployment and inflation rising, tax protesters on the streets, and a prolonged and bitter strike by postal workers, 1979 was the year in which the direction of economic policy by a small ‘inner cabinet’ of Lynch's closest supporters sparked off a revolt in the parliamentary party. Some of those involved were new TDs with a background in business and accountancy, including Albert Reynolds and Charlie McCreevy. Others were aghast at the party's poor electoral performance. In the first elections for the European Parliament in June, Fianna Fáil's vote slumped to 34 per cent, and it won only five of the Republic's fifteen seats. Most galling for Lynch was the election of one of his most virulent republican critics, Neil Blaney, as an Independent in the Connacht/Ulster constituency.49 Then in November the party lost disastrously in two by-elections in Cork, one of them in Lynch's own constituency.
To the economic reverses and electoral rebuffs were added the legacy of the Arms Crisis and Lynch's unpopularity with the unreconstructed republicans in the party. On 27 August 1979 the IRA blew up a yacht belonging to the Queen's cousin, Lord Mountbatten, who was holidaying in County Sligo. Mountbatten and three others of the party were killed. At Narrow Water in County Down on the same day another IRA attack killed eighteen soldiers. Lynch agreed to requests from Thatcher to allow British military aircraft brief incursions into the Republic's airspace in pursuit of terrorists. When news of the ‘air corridor’ agreement appeared in the press, it produced a paroxysm of traditionalist rage against such ‘collaboration’ with a Tory government. An attempt to discipline a TD who had claimed that Lynch had lied about the agreement backfired badly, and then Síle de Valera, a granddaughter of de Valera, made an only slightly veiled attack on Lynch's northern policy in an address to a Fianna Fail commemoration. Lynch, shocked by the extent and bitterness of the backbench revolt, announced that he would resign. It is unlikely that the government's failures on the economy and the election reverses would-in themselves have led to Lynch's decision. His administration had another two years to run and previous governments had recovered from similar reversals. It was the extra dimension of bitterness that came from the legacy of the Arms Crisis, the ‘sulphurous’ atmosphere that a journalist detected in the parliamentary party,50 that propelled Lynch, a leader who had prided himself in his ability to bring together the different wings of the party, out of politics. In the contest for the leadership that followed, Haughey defeated Colley by forty-four votes to thirty-eight.
Haughey's victory has been depicted by one of his numerous critics as the opening up of ‘the most sordid and diseased chapter in Irish political life since the end of the civil war’.51 One of a number of tribunals of inquiry established at the end of the 1990s to investigate corruption in Irish politics since the 1960s established that Haughey had run up a debt of £1.14 million with the Allied Irish Bank during the 1970s and that he had used his position as Taoiseach to persuade the bank to settle for £750,000.52 At the time rumours about how he had acquired his fortune in the 1960s abounded, as did those about his current financial problems. It was to these that Garret FitzGerald alluded in his speech on Haughey's nomination as Taoiseach when he referred to a ‘flawed pedigree’ and a man who, while his abilities were undeniable, should be disqualified from high office as he wanted ‘not simply to dominate the state but to own it’.53
With a self-image that seemed to blend the Renaissance prince and the Gaelic chieftain, Charles Haughey did not regard himself as bound by the conventional values that applied to ordinary mortals. In the late 1970s bank officials were threatened with his displeasure if they dared to apply the same standards to him as to other debtors. In 1987 Ben Dunne, one of Ireland's leading businessmen and an admirer of the Taoiseach, was approached to bail him out of an even deeper hole of indebtedness and provided him with payments in excess of £1 million over the next few years.54 The many rumours about how Haughey financed such a lavish lifestyle did not damage his immense popularity with a substantial section of the party and the electorate. Like the ‘whiff of cordite’ associated with the Arms Trial, such rumours made him seem appealingly dangerous. As the Irish political journalist Stephen Collins has noted, Haughey's popularity revealed the continuing influence of ‘deep ambivalence to politics and law, coupled with the atavistic anti-English strain in Irish nationalism’ amongst many Irish people.55
Haughey had always been dismissive of Lynch's consensual and relaxed leadership style, and his own was characterized by the encouragement of a deferential and at times fearful loyalty amongst his supporters, who called him ‘Boss’, and the implacable desire to marginalize his opponents. Although some of these, including Colley, who refused to offer Haughey loyalty as leader of the party and demanded a veto on the appointment of the Ministers for Justice and for Defence, were resolute in opposition, others, including Des O'Malley, were open to persuasion.56 Instead, Haughey looked towards a victory in the next general election as the prerequisite for a final purge of his most irreconcilable critics.
The fixation on obtaining a Fianna Fáil majority was in part responsible for his rapid volte-face on the economy. In his first televised address to the nation on 9 January 1980, he had sounded a stern note: ‘as a community we have been living beyond our means… we have been living at a rate which is simply not justified by the amount of goods and services we are producing.’57 Having sacked Martin O'Donoghue and abolished his department, Haughey now proposed cuts in government expenditure and a reduction in borrowing. A large part of the business and financial community, virtually all of the media and most professional economists were enthused at the prospect of a Celtic Thatcherism. It was not to be, at least not yet. A right-wing turn in economic policy made good economic sense but was politically perilous for a party whose recovery from the post-war doldrums had been based on Lemass's mixture of economic expansion and cooperation with the unions. Working-class resentment on the taxation issue had been manifest two weeks after Haughey's television address, in what the BBC referred to as ‘the largest peaceful protest in postwar Europe’.58 An ICTU-organized national strike for tax reform was supported by 700,000 workers, with a mass demonstration of 300,000 in Dublin. For many of those TDs who had supported Haughey, fiscal rectitude seemed a recipe for political suicide.
Haughey's own lavish and debt-financed lifestyle may have made him uncomfortable with demands that the largely working-class electorate of his North Dublin constituency put on hair shirts while his own wardrobe was tailor-made in Paris.59 His political career and personal fortune had been built in the expansionary 1960s, when the building industry had begun to have an increasingly powerful influence on Fianna Fáil.60 This was a major sector of the economy that stood to lose badly from neo-liberal policies. Big cuts in public expenditure might be seen as necessary to get the economic fundamentals right by those sections of Irish industry that had successfully made the transition to free trade and selling abroad. However, there remained many Irish manufacturers who were uncompetitive, relied on the domestic market and were directly threatened by the shrinkage in demand that deflationary policies would inevitably produce. Together with the trade union movement, they forced Haughey to backtrack. Within months the government had agreed another National Understanding with the unions, which involved an increase in welfare benefits and job-creation targets along with a promise of more investment in infrastructure and a continuation of high levels of government borrowing. Haughey's former business allies despaired as the budget deficit rose from £522 million in 1979 to £802 million in 1981 and the Exchequer borrowing requirement from 13.8 per cent of GNP to 16.8 per cent,61 with the Department of Finance forecasting that it would reach 21 per cent by 1982.62
With all the main economic indicators deteriorating, Haughey attempted to maintain popular support by a robustly nationalist line on Northern Ireland. Describing it as a ‘failed political entity’, he announced that he wanted to raise the issue to a ‘higher plane’ by seeking a solution through direct negotiations with the British government.63 Despite his public disdain for Thatcher's neo-liberal economic policies, he was obviously attracted by her imperious mode of government and her impatience with the inherited policy of power-sharing devolution. There were hints of a willingness to consider a defence deal with the UK and, more immediately, after his first meeting with Thatcher when he presented her with a silver Georgian teapot, it was announced that there would be a meeting between the Chief Constable of the RUC and the Garda Commissioner.64 The British hoped that Haughey's solid republican credentials would allow him to act decisively against the IRA. As a result, Haughey did remarkably well in the major Anglo-Irish summit held in Dublin on 8 December 1980. In their joint communiqué after the talks, Thatcher acknowledged Britain's ‘unique relationship’ with Ireland and permitted the establishment of joint study groups to find ways of expressing this uniqueness in ‘new institutional relations’. The two Prime Ministers agreed to devote their next meeting to considering ‘the totality of relations within these islands’. Haughey's subsequent demagogic exploitation of this phrase infuriated Thatcher, and differences over the IRA hunger strikes and the Falklands War further soured relations between the two. However, the logic of Haughey's approach that the two governments should act over the heads of the northern parties, particularly the Unionists would come to partial fruition in the Anglo-Irish Agreement.
In the short term the credibility of Haughey's approach to the North was damaged by the hunger strikes and his failure to have an influence on Thatcher's handling of them. Nevertheless, unsure of the electorate's verdict on his economic stewardship, he dissolved the Dáil on 21 May 1981, claiming that he was calling the election ‘because of the grave and tragic situation in Northern Ireland’.65 This was the first time Northern Ireland had been proclaimed the central issue in a southern election. Although Bobby Sands had died on 5 May and other hunger strikers were nearing death, the bulk of the electorate continued to focus doggedly on the domestic issues of taxation, inflation and unemployment. Haughey, who was about equal in popularity with FitzGerald when the election was called, paid a hefty price for such a clumsy diversionary tactic. By giving a high profile to Northern Ireland he provided Sinn Féin with the best opportunity for advance in southern politics since the 1950s. Nine republican prisoners were nominated for the election and the two that were successful took seats that would otherwise have gone to Fianna Fáil.
Any vestigial claim to economic competence or responsibility that his government might have made was undermined by his descent into crude vote-buying in key constituencies, with a commitment to an international airport in a remote part of County Mayo to bring pilgrims to the Marian shrine at Knock and a deal with workers in the Talbot car assembly plant in his constituency that guaranteed them state salaries for life when the plant closed. Both commitments were made without any consultation with his colleagues or the Department of Finance.66
The result of the 1981 election was a substantial victory for Fine Gael, whose percentage of the vote increased from 30.5 to 36.5 and seats from forty-three to sixty-five, its best ever result, even considering that the overall number of Dáil seats had increased from 147 to 166. Under Garret FitzGerald's leadership since 1977, Fine Gael had modernized its archaic structure and transformed its culture of genteel amateurism. Youth and women's wings were established, and it was the first of the major parties actively to promote women candidates, becoming home to some of those who had played a prominent role in the development of the Irish women's movement in the early 1970s.67 The party had waged a professional and aggressive campaign, and its promise of large cuts in income tax had allowed it to make inroads into working-class support for Fianna Fáil. FitzGerald's public persona – that of an amiable and loquacious academic – contrasted sharply with Haughey's tight-lipped and imperious aura.
Fianna Fáil's vote dropped from 50.6 to 45.3 per cent and its seats from eighty-four to seventy-five.68 The Lynch–Haughey inheritance of debt and inflation led to a sharp decline in middle-class support, while rising unemployment and lack of tax reform produced an only slightly less sharp drop in working-class support.69 However, its vote in 1977 had been exceptional, and, given the worsening economic situation, its losses were not unexpectedly high. In 1969 Fianna Fail had won an overal majority of seats with a slightly smaller share of the votes. It was the agreement between Fine Gael and Labour to urge their supporters to give their second preferences to the other party that proved decisive. Without the transfer arrangement Fianna Fail would have won five extra seats, which, given the absence of the two hunger strike TDs, would have provided it with a clear overall majority.70 Haughey made use of this to claim that he had not really lost the election: a quirk of the electoral system and the intervention of the hunger strikers had robbed him of victory.71 That the new government was a minority administration dependent on the votes of three leftist independents encouraged him and his supporters to believe that their loss of office would be brief.
Although still convinced that Fine Gael's only secure future was as a ‘social-democratic’ party, FitzGerald was soon forced to apply a radical deflationary programme to deal with what his Minister for Finance, the wealthy County Meath farmer John Bruton, termed the threat to national economic independence that was the legacy of the previous government.72 An emergency budget was introduced in July with increases in indirect taxation and spending cuts aimed at reducing the Exchequer borrowing requirement from 20 to 16 per cent of GNP.73 The draconian budget created major problems for the junior partner in the coalition: Frank Cluskey, the gruff Dublin trade unionist who had been elected Labour leader in 1977, would probably have led his ministers out of government. However, Labour had lost two seats in the election and one of those was Cluskey's. His successor was the altogether smoother Michael O'Leary, a former student radical who had been a research officer for the ICTU before becoming Minister for Labour in the 1973–7 coalition, where he was seen as the most successful of the Labour ministers.74
Labour's performance in the election had been dismal. Given a bad result in 1977 and that it was in opposition at a time of very high unemployment and inflation, it had expected to make gains. But its share of the vote fell to less than 10 per cent for the first time since 1957 and its number of seats to fifteen in a much larger Dáil. Its performance in Dublin was particularly bad, with a reduction of three seats that left it only three, a sad decline on the ten it had won in 1969. The party remained divided over the leadership's support for a coalition strategy. Anti-coalition feeling and a more ideological socialism were strong amongst party members in Dublin, but continued backing for a coalition was guaranteed by the support of rural members. Critics argued that the pursuit of coalition with Fine Gael had blurred Labour's distinctiveness and weakened its independent appeal: ‘since a vote for Labour was a vote for a Fine Gael-dominated coalition, then in many ways it may make more sense simply to vote for Fine Gael per se.’75 It now faced a challenge from a number of smaller parties to its left. Noel Browne had changed his party affiliations yet again and was elected as a Socialist Labour Party TD in Dublin; Jim Kemmy, an independent socialist with strongly anti-nationalist views on Northern Ireland, won Limerick East; and Joe Sherlock won East Cork for Sinn FéinThe Workers' Party (SFWP), as the increasingly successful political arm of the Official IRA was now known.
Labour entered the 1981 coalition from a position of weakness. In 1969 it had won half as many votes as Fine Gael; now it had barely a quarter. With four cabinet seats out of fifteen, the Labour ministers could do little to blunt the edges of Bruton's draconian budget except prevent the income tax cuts that would have intensified the regressive effects of the taxation changes. Dissent within the party increased, and in October its ruling Administrative Council declared that the Labour ministers had exceeded their mandate in agreeing to the July budget. However, worse was to come when in January 1982 Bruton proposed an even tougher second budget, with cuts in food subsidies, rises in indirect taxation and new taxes on clothing and footwear. FitzGerald refused to consider an exemption for children's shoes in case it was exploited by women with small feet. This was the last straw for Jim Kemmy, who subordinated his strong dislike of Haughey's position on Northern Ireland to his rejection of such a regressive measure and voted with the Opposition against the budget, thus ensuring the government's defeat by eighty-two votes to eighty-one.
Despite its commitment to austerity, Fine Gael marginally increased its vote in the subsequent inconclusive general election in February 1982, although its number of seats fell by two to sixty-three. Fianna Fáil increased its vote from 45.3 to 47.2 per cent and its seats from seventy-eight to eighty-one. The Labour Party's vote had declined slightly, but it held its fifteen seats, although it now faced a sharp left-wing challenge in the Dáil after the SFWP made a breakthrough to win three seats. The three SFWP TDs and four independents held the balance of power and were assiduously courted by Haughey.76
Haughey's failure to win a majority for the second time precipitated a period of intense convulsion in his party. The Opposition front bench was already divided over economic policy when the election was called. In an attempt to mend fences with some of his most prominent critics in the party, Haughey had appointed Martin O'Donoghue as the party spokesman on Finance and had agreed that a more ‘responsible’ attitude be adopted to the government's proposals for dealing with the dire economic situation. However, as soon as the campaign started he reverted to populist mode and attacked the coalition's ‘Thatcherite’ approach. FitzGerald, he claimed, was ‘hypnotized’ by the issue of the national debt, and Fianna Fáil would find ‘a more humane way’ of running the economy, even if it meant borrowing money. This failed to convince many of his colleagues, and it also had little impact on the electorate. At the beginning of the campaign 51 per cent of those polled preferred FitzGerald as Taoiseach, compared to 31 per cent for Haughey; by the end the respective figures were 56 and 36 per cent.77
Even before a new government could be formed, Desmond O'Malley had declared his intention to stand against Haughey for the leadership of the party. O'Malley's distrust of Haughey dated from the Arms Crisis, when he had been a key supporter of Lynch. It was now accentuated by his wholehearted commitment to neo-liberal economics and an identification of Haughey as an irresponsible populist. However, O'Malley's aloof and prickly personality made him an unappetizing alternative to that sizeable section of Fianna Fail TDs who were wavering in their allegiances, and when Martin O'Donoghue, who had been O'Malley's campaign manager, at the last moment called for unity behind Haughey, O'Malley withdrew his challenge. Haughey then outbid FitzGerald for the support of Tony Gregory, an Independent TD of republican-socialist leanings, who represented an inner-city constituency in Dublin. The ‘Gregory deal’ involved a government commitment to spend over £80 million in job creation, new housing, environmental works and schooling.78 The support of the three SFWP TDs for Haughey was a major surprise, given that party's shift to a position on Northern Ireland that accepted the need for unionist consent for constitutional change. The party supported the proposals of James Prior, the Northern Ireland Secretary, for the election of a Northern Ireland Assembly. While Haughey believed the proposals to be unworkable, he agreed to adopt a public position of neutrality. Together with his promise of opposition to the privatization of state-owned companies and his anti-Thatcherite rhetoric, this was sufficient to obtain SFWP support.79
The government's short life was dominated by rumours of plots and the unorthodox methods adopted by some of Haughey's supporters to deal with his critics. George Colley was dropped from the cabinet and, with his veto on appointments to the Ministries of Defence and Justice removed, Haughey filled the positions with two of his loyalists, Seán Doherty and Paddy Power. Power was a very traditional republican and when the Belgrano was sunk during the Falklands War he embarrassed Haughey by making a speech accusing the British of being the aggressor. However, it was the appointment of Doherty that would have the most devastating long-term effects on Haughey's career. Only thirty-seven when appointed, the County Roscommon TD had been one of Haughey's most strident supporters. An ex-Garda, he showed little inclination to respect the law when it came into conflict with his political or personal priorities. In January 1983 the Garda Commissioner and his deputy were forced to resign when it emerged that they had agreed to Doherty's request for the tapping of the telephones of two journalists. The purpose of the taps was to discover which of Haughey's critics in the party had been talking to the press. Doherty also supplied Ray MacSharry, the Tánaiste and Minister for Finance, with Garda equipment to bug a conversation with Martin O'Donoghue. When in August a suspected murderer was found living in a flat owned by the Attorney-General, who departed on a holiday to New York in spite of the crisis, Haughey described the sequence of events as ‘grotesque, unbelievable, bizarre and unprecedented’. Conor Cruise O'Brien turned the description into a telling acronym that became the government's epitaph: GUBU. The débâcle was to lead to another attempt to oust Haughey in the autumn, which failed, although this time twenty-two TDs openly opposed him. However, the fate of the government had already been decided by yet another turn in economic policy.
Ray MacSharry had initially dismissed the economic policies of the coalition as ‘gloom and doom’ and promised ‘boom and boom’. However, as 1982 progressed, the economic crisis deepened, as more companies collapsed, more redundancies were made, and unemployment rose. At the same time net foreign debt rose from £3.45 billion at the end of 1981 to £5.11 billion a year later.80 In response MacSharry announced a radical shift in policy in July, with a postponement of an already agreed rise in public sector pay along with a series of spending cuts. The government's apparent conversion to economic realism was complete by October, when it published a major economic policy document, The Way Forward, which committed it to phasing out the budget deficit by 1986. The promise of austerity ahead brought an end to SFWP support. The party had already been annoyed by Haughey's denunciation of the Prior proposals for a northern Assembly when they were made public in April. When Garret FitzGerald put down a vote of no confidence in November, the government fell.
The second general election in less than a year saw Fianna Fáil's vote fall from 47.3 per cent to 45.2 per cent, while Fine Gael's rose from 37.3 per cent to 39.2 per cent, and Labour's increased marginally from 9.1 per cent to 9.4 per cent. Fianna Fáil lost six seats, while Fine Gael gained seven and Labour one. Michael O'Leary had resigned as leader of the Labour Party in October after failing to persuade its annual conference to adopt a pre-electoral commitment to coalition. His successor was Dick Spring, a 32-year-old barrister who had been elected to the Dáil for the first time in the 1981 general election. Spring's father, Dan, from whom he inherited his North Kerry constituency, had been typical of the rural TDs who had dominated the party until the 1960s. His son's horizons had been widened through the still-unusual choice of Trinity College Dublin as his university and by two years spent working in the US. The result was that, although Spring maintained his father's distrust of the intellectual left in the party, as personified by the eloquent Galway TD and Chairman of the party, Michael D. Higgins, he was much more sympathetic to those arguing for a liberal agenda on such issues as divorce and contraception than many of his rural-based colleagues.81
With Fine Gael's seventy seats and Labour's sixteen, the coalition had a working majority in the 166-seat Dáil. Spring was Tánaiste and Minister for Environment; Frank Cluskey, Minister for Trade, Commerce and Tourism; Liam Kavanagh, Minister for Labour; and Barry Desmond, Minister for Health and Social Welfare. Although Spring developed a good personal relationship with FitzGerald, he came into frequent and sometimes public conflict with Alan Dukes, the Minister for Finance. Like Spring, Dukes had entered the Dáil for the first time in 1981. A former student of FitzGerald, he had been an adviser to the Irish Farmers' Association and was on the right of Fine Gael. Dukes gave strong support to the view of Department of Finance officials that the major task of the government was to cut the budget deficit by the maximum amount possible. Dukes's right-wing radicalism allowed FitzGerald to present himself to Spring and his Labour colleagues as a moderate social democrat trying to contain the Thatcherites in the Fine Gael ministerial group and parliamentary party. He supported Labour's demand for a residential property tax and for a National Development Corporation to deal with the problem of the growing number of young unemployed.82
The unease that this apparent alliance between the Taoiseach and Tánaiste produced within Fine Gael has led some commentators to claim that FitzGerald's government failed to confront the crisis of the public finances.83 But by taking some account of Labour's concerns in both the 1983 and 1984 budgets, FitzGerald was able to implement what remained quite draconian cuts in public expenditure accompanied by substantial rises in taxation. The coalition thus made an important contribution to the reduction in the Exchequer borrowing requirement from a threatened 21.5 per cent of GNP in 1982 to 1.5 per cent in 1989.84 Inflation was cut from 17 per cent to 4 per cent. The cost was high for many of Labour's traditional supporters. Real personal income after tax fell by 12 per cent between 1980 and 1986, and emigration, after net inflows in the 1970s, averaged 25,000 a year during the 1980s.85 The Labour Party paid a high electoral price for FitzGerald's economic achievement. It lost its four seats in the European Parliament in the 1984 elections, and in the local government elections of 1985 it did badly nationally and was humiliated in the capital, where the Workers' Party, as SFWP was now known, won six seats to its two.86 Spring finally decided to leave the government in January 1987 rather than support cuts in health expenditure.
In the general election that followed, Labour's support dropped to 6.4 per cent – its worst result since 1933 – although it managed to retain twelve seats. Fine Gael dropped from 39.2 per cent to 27.1 per cent and from seventy to fifty-one seats. Despite the unpopularity of the government parties, Fianna Fáil under Haughey failed for the fourth time to win a majority. Its vote fell marginally to 44.1 per cent, although its number of seats increased from seventy-five to eighty-one. The biggest shock of the election was the performance of a new party, the Progressive Democrats, who replaced Labour as the third-largest party, winning 11.8 per cent of the vote and fourteen seats. The party had been formed in early 1986 after a schism from Fianna Fáil led by Des O'Malley Although its main figures were prominent ex-Fianna Fáilers, including Bobby Molloy and Mary Harney, it was able to attract support from sections of Fine Gael who had disapproved of the ‘contamination’ of the party's traditional conservative stance by the coalition arrangement with Labour.87
The recession had promoted a new left–right polarization in Irish politics, pitting Labour and the Workers' Party against Fine Gael and the Progressive Democrats. Fianna Fáil had fought the election on a centrist platform, renewing its commitment to economic growth, welfarism and social partnership while accepting the need for some degree of fiscal balance. A trade union movement that had felt spurned and neglected by the coalition was happy to have Haughey back in power. In opposition, Haughey had assiduously cultivated trade union leaders. A Fianna Fáil Trade Union Committee was established in 1986 and through it a series of meetings with key union officials laid the basis for the government–union concordat, The Programme for National Recovery, concluded in October 1987. As Kieran Allen has pointed out, Haughey was the beneficiary of the decline in trade union strength and militancy that the soaring redundancies, unemployment and rocketing emigration of the early and mid 1980s had produced.88 Shut out of any role in the framing of public policy on the economy under FitzGerald and Spring, and with the Progressive Democrats keen to import a pure neo-liberal model, it was little wonder that the trade union leadership accepted Haughey's offer to participate in what he skilfully presented as a national stabilization programme based on partnership rather than on a Thatcherite dog-eat-dog philosophy.89 In return for an agreement for modest wage increases over a three-year period, the unions were tied into cooperation with a government that proceeded to implement a cuts package of £485 million.
The size of the cuts proposed by Ray MacSharry, Haughey's Minister for Finance, so impressed the new leader of Fine Gael, Alan Dukes, that he announced that he would not oppose the government as long as it stuck to its commitment to slash expenditure. Dukes's so-called ‘Tallaght Strategy’ meant the arrival of a dominant ideological consensus from which only Labour and the Workers' Party were excluded. MacSharry's economic shock therapy, implemented in two budgets, cut public expenditure by £900 million, or 8 per cent, between 1987 and 1989. Within a short period of time the harsh medicine appeared to work. Economists started to talk about ‘expansionary fiscal contraction’. The dominant consensus on putting the public finances in order had apparently restored the confidence of investors, and from the second half of the 1980s the Irish economy began to grow at rates that far outpaced the rest of Europe.90
Irish GDP rose by 36.6 per cent between 1987 and 1993, compared with an increase of 13.3 per cent in the EU as a whole.91 Growth accelerated in the period from 1994 to 1999, when GDP rose by 8.8 per cent a year. Ireland had surpassed even the emerging ‘Tiger’ economies of Asia in terms of growth rates, industrial production and low inflation. Unemployment, which had stood at 17 per cent in the mid 1980s, the second highest in the EU, had fallen to 6 per cent – below the EU average – in 1998 and was reduced further to 4.4 per cent in July 2000.92 By the end of the decade the Republic's per capita income surpassed Britain's and by 2004 its per capita GDP was the second highest in the EU, behind Luxembourg.93 The OECD, notoriously a severe judge of national economies, said of the Republic in 1999: ‘It is astonishing that a nation could have moved all the way from the back of the pack to a leading position within such a short period, not much more than a decade, in fact.’94
The more euphoric accounts of the Republic's ‘economic miracle’ need to be deflated. Gross National Product, which is the final output attributable to Irish workers, firms and government, has consistently grown less quickly than Gross Domestic Product. This is because an increasing proportion of production within the country accrues to foreigners, mainly in the form of profits going to foreign investors and as interest on the foreign debt. GDP was also overstated because of transfer pricing by multinational corporations who exploited the fact that Ireland was a low-tax jurisdiction for most corporations (10 per cent on the profits of manufacturing firms) by inflating the proportion of their overall profits that they claimed to have been generated in Ireland. Disposable income per head also grew much more slowly, in part because of unfavourable movements in the terms of trade and also because of a fall in the transfer payments from the EU as the Republic's economic success made it less eligible for such assistance.95
Ulster Unionist critics made much of the role of these transfers in generating the boom. The EU had created Structural and Cohesion funds to deal with the difficulties that the less developed and poorer members would experience in the process of creating a Single Market that began with the Single European Act in 1987 and was completed with the Maastricht Treaty in 1992. The strong endorsement of both by the Irish electorate reflected government promises of Euro bounty to come. In 1992, promoting a ‘yes’ vote in the referendum on Maastricht, the Taoiseach, Albert Reynolds, claimed that the Republic would receive £8 billion in the next allocation of Structural and Cohesion funds. Although this claim was inflated and received frostily in Brussels, Ireland did eventually get over £6 billion, and this was reckoned to have raised GNP by between 2 and 3 per cent. Although small in gross terms, the funds did make a very significant contribution to public expenditure in infrastructure projects, which were important in the 1990s take-off.96
All serious accounts of the boom agree that it was a product of a number of factors, of which EU funding was a real but in no way decisive one. The Single Market was much more directly important, as it made the Republic an even more attractive location for foreign investors, particularly US ones. The Republic's IDA was already offering high grants, tax breaks, and a young and skilled workforce. It had also proved adept at ‘picking winners’ - setting out to expand particular industrial sectors, including electronics, pharmaceuticals, chemicals, software and, more recently, financial services and tele-services. By the end of the 1990s leading-edge companies such as Intel, Microsoft, IBM, Dell, Hewlett-Packard and Kodak were all represented in Ireland. The Republic was also benefiting from the substantial increases in investment in education and training dating from the 1960s. As one US commentator noted, ‘Ireland's well-educated workforce today offers multinational businesses perhaps Europe's best ratio of skills to wages.’97
For all the complexity of the debate on the causes of the unprecedented levels of economic growth, there is little doubt that the reinvigoration of social partnership between unions, employers and the state played a fundamental domestic role.98 The National Economic and Social Council (NESC), an offspring of Lemass's corporatist initiatives in the 1960s, had in 1986 worked out an agreed strategy to escape from the vicious circle of stagnation, rising taxes and exploding debt. Haughey had used this as the basis for his negotiation of the Programme for National Recovery in 1987, which ran to 1990. It was the first of four agreements that brought the Republic through more than a decade of negotiated economic and social governance.99 The Programme for National Recovery was followed by the Programme for Economic and Social Progress (1991–3), the Programme for Competitiveness and Work (1994–7) and Partnership 2000 (1997).
In exchange for trade union support for corrective measures in fiscal policy, the government committed itself to maintaining the value of social welfare payments. In return for moderate pay rises, take-home pay was increased through tax reductions. The agreements fixed pay increases and established common ground on a range of issues from tax reform and measures to tackle poverty to exchange-rate policy and measures Ireland was to adopt to prepare for membership of a European Single Currency. Although there was some rank-and-file dissatisfaction with evidence of rocketing corporate profits while wage increases lagged behind, a dramatic drop in the number of strike days from an average of 316,000 a year in the eight years to 1987 to an average of 110,000 a year in the nine years to 1996 was an indication of the success of social partnership.
The evidence that the economic gloom of the coalition years was fast dissipating and the opposition's tacit support for the main lines of his government's economic policy encouraged Haughey to call another general election in June 1989. Although Fianna Fáil's vote dropped only marginally, it lost two seats. More importantly, while its support among middle-class voters increased, there were major losses of working-class support to Labour and the Workers' Party. With fifteen Labour Party TDs and seven from the Workers' Party, together with two left-wing independents, the Irish left had won its highest share of Dáil seats ever. Richard Sinnott noted that ‘The story of the election is undoubtedly the polarisation of the voters along class lines.’100 Fine Gael had improved its position somewhat, with an increase in its vote from 27.1 per cent to 29.3 per cent and in its seats from fifty to fifty-five. More than half of the Progressive Democrats' support was lost to Haughey's new-found economic respectability: the party's vote dropped from 11.8 per cent to 5.5 per cent and its seats from fourteen to six.
Haughey attempted to persuade Fine Gael and the Progressive Democrats to continue with the ‘Tallaght Strategy’, but both now demanded a share in government, and he was forced to abandon what had hitherto been proclaimed as a central value of Fianna Fail: its refusal to consider forming a coalition with another party. By entering into government with the Progressive Democrats in July 1989, Haughey finally ended the pretence that Fianna Fail was a ‘national movement’ and not a mere political party. At the time, the deal with their former colleagues that brought Desmond O'Malley and Bobby Molloy into the cabinet represented a deep ‘cultural shock’ to many in Fianna Fáil.101 Yet by jettisoning the traditional imperative to form only a single party government, Haughey had placed his party in a better position to maintain a dominant role in what had become a much more fragmented party system. Now it could tack to the right or left, forming alliances with the Progressive Democrats or Labour and the Workers’ Party. Ironically, the greatest obstacle to the full development of this new flexibility was Haughey himself. He remained anathema to many on the Irish left. This was not for his economic viewpoint, which, apart from his Thatcherite lapse in 1980, was rhetorically Keynesian, even Peronist. Rather it reflected the fact that the 1980s had witnessed intense debates on moral issues and Northern Ireland during which Haughey had positioned his party on the side of traditional Catholic values and irredentism.
Two decades of rapid economic growth after 1959, urbanization, a new openness to the outside world and sweeping cultural change created the conditions for fierce debates over the Catholic Church's teachings on sexual behaviour and morality. An important factor in promoting change was the increase in the participation of women in the labour force. From partition to the 1960s, the opportunities for female participation in paid employment had been restricted by the South's lack of a significant manufacturing sector, particularly one with industries that tended to employ women.102 In 1961, 28.5 per cent of women and only 5.2 per cent of married women were economically active in the South, compared with 35.3 per cent and 19.5 per cent in the North. By 1995 the respective figures were 38.5 per cent of women and 36.6 per cent of married women in the South and 62 per cent of women and 64.2 per cent of married women in the North. Thus, even in the 1990s the proportion of women in the labour force in the South was still below the EU average of 45 per cent.103
The mass entry of married women into the labour market and the expansion of higher education formed the background in Western developed countries to the impressive expansion of feminist movements from the 1960s on.104 Ireland's participation in these developments was later and more muted but significant none the less. Together with an urbanized, better educated and younger population in a society less insulated from the materialist values of consumer capitalism, they represented a major challenge to the defenders of traditional Catholic values.
The Irish Catholic Church had shown only very limited signs of responding to the far-reaching alterations in liturgy, theology, Church government and ecumenism promoted by the Second Vatican Council (1962–5). There was a process of liturgical renewal and a limited expansion of a lay role in Church government. Although there was no objection when, in 1972, the government proposed the deletion of Article 44 of the Constitution, which had accorded a ‘special position’ to the Catholic Church, Ireland experienced no ecumenical revolution, with inter-church activity often restricted to ‘rarefied theological discussion’.105 The Irish Church's conservatism was most obvious in its undeviating support for Humanae Vitae, the encyclical of Pope Paul VI, in 1968, which had come out against all artificial means of contraception. The hierarchy was relentless in its opposition to any change in the law on contraceptives despite the Supreme Court decision in the Magee case in 1973 and the fact that opinion polls showed a growing level of public support for legalization.106
This stance contributed to the weakening of the Church's moral authority in the 1970s and 1980s. It provided the impetus for the development of the Irish women's movement when, in 1971, feminists took a train from Dublin to Belfast in order to buy contraceptives and import them into the Republic in defiance of the 1935 Criminal Law (Amendment) Act, which proscribed their sale, importation, advertisement and distribution.107 The failure of the coalition's attempt to reform the law in 1974 led to the formation of a Contraception Action Programme, a pressure group composed of women's groups and Labour Party activists, including Senator Mary Robinson, who forced the coalition's hand by introducing her own, much more liberal bill in the Seanad. It was their activist campaign that began to influence the public mood and made reform an issue in the 1977 election, inducing Fianna Fáil to give a commitment to introduce legislation. The Health (Family Planning) Bill was introduced by Charles Haughey in December 1978 and declared by him to be ‘an Irish solution to an Irish problem’. It provided for the availability of contraceptives on prescription where the doctor was satisfied that they were sought ‘bona fide for the purpose of family planning’.108 It was a minimalist response to a situation where couples were increasingly using birth-control methods without concern for the law.
Despite its limited nature, the legislation contributed to a growing traditionalist backlash. Following the example of ‘pro-life’ pressure groups in the US and Britain, the initiative came from lay Catholics rather than from the clergy or the hierarchy. The fundamentalists had been given major encouragement by the visit of Pope John Paul II to Ireland in 1979, which the Irish hierarchy had organized with the purpose of stemming what it perceived as the rising tide of materialism and secularism. The Polish pope, smarting after an Italian referendum in favour of divorce and with an ongoing campaign to legalize abortion in Italy (which would be successful in 1981), depicted Ireland as a proud centre of the faith but warned that forces were working to tempt it away from this historic role. In his address at Limerick the Pope called for a continuing Irish witness to ‘the dignity and sacredness of all human life, from conception to death’.109
Abortion was illegal in Ireland under the 1861 Offences against the Person Act, but was not expressly forbidden in the Constitution. The religious right feared that a successful campaign by feminists and Dublin liberals and leftists might result in its legalization. An Irish branch of the British Society for the Unborn Child was established in the aftermath of the Pope's visit, and in 1981 the Pro-Life Amendment Campaign (PLAC) was founded to push a constitutional amendment to prohibit abortion. Taking advantage of the unprecedented degree of governmental instability in the early 1980s, the PLAC had no problems in getting pledges from both FitzGerald and Haughey that they would support the holding of a referendum on abortion. Before it left office in 1982, the Haughey government introduced its proposed wording for an amendment to the Constitution: ‘The State acknowledges the right to life of the unborn and, with due regard to the right to life of the mother, guarantees in its laws to respect, and as far as is practical by its laws to defend and vindicate that right.’ Back in government in 1983, FitzGerald rejected the Fianna Fall wording, but this was eventually endorsed by the Dáil with the support of Fine Gael and Labour Party defectors.
Voting took place on 7 September 1983 following a campaign that reached levels of acrimony ‘probably not witnessed in Ireland since the post-Treaty campaigning by rival sides in 1922’.110 Although the amendment was passed, the referendum was a disappointment for the Church. Of those who voted, 66.5 per cent were in favour of the amendment, but only 54.6 per cent of those eligible had actually voted, reflecting a feeling amongst a sector of the population that the referendum was an unnecessary distraction from more pressing economic and social issues.
At the time some argued that the low turnout and the fact that the amendment was carried with only the slimmest of majorities in Dublin boded ill for the future of traditional Catholic values.111 It was true that there was continuing evidence of large-scale rejection of the Church's position on contraception, particularly amongst the young and the university-educated urban middle class. It was this that induced the coalition government to introduce new family-planning legislation in 1985. Its most notable provision allowed for the sale of contraceptives to anyone aged over eighteen. It was passed by the Dáil despite the opposition of the Catholic hierarchy, opportunistically tail-ended by Fianna Fail. Desmond O'Malley refused to vote against the bill, arguing that the Fáil had to prove itself free to legislate on such matters regardless of the teaching of the Catholic Church. For this and his declaration that he would stand by the concept of a secular republic, he was expelled from Fianna Fail. Within a year he was leading the Progressive Democrats, a party whose main dynamic came from the secularizing impulses of the urban middle class.112
That such a secularizing trend was still relatively weak was shown in 1986 when the coalition failed in its attempt to legalize divorce, which was proscribed under Article 41 of the 1937 Constitution. The hierarchy made clear its opposition to the proposed constitutional amendment and the associated divorce legislation in a leaflet delivered to every home in the country. The Archbishop of Dublin, Dr Kevin McNamara, warned that ‘divorce would generate a social and moral fallout as lethal as the effects from the recent accident at the Chernobyl nuclear power station.’113 As in 1983 the traditionalist campaign was spearheaded by a coalition of lay Catholic groups headed by the Family Solidarity organization. It amplified the Church's moral arguments, with an appeal to material insecurities connected with property and inheritance rights and visions of deserted and impoverished mothers with starving children.114 The result was a second defeat for the liberal agenda. On a turnout of 60.5 per cent, the amendment was rejected by 63.5 per cent to 36.5 per cent. There was little consolation to be drawn from the fact that the amendment was supported by a small majority of Dublin voters. Optimistic liberals argued that the low turnout in both referenda and that concerns about land and property ownership as well as succession rights were important influences in the divorce referendum showed that traditionalism was on the wane. Yet, when a further referendum was held nine years later, the amendment in favour of divorce was carried only by a paper-thin majority.115
This was hardly a ringing endorsement of pluralism, particularly given that there had been a number of major blows to the religious right and the moral authority of the Catholic Church in the early 1990s. In 1992 a fourteen-year-old girl who was pregnant as a result of rape was prevented from seeking an abortion in Britain by an injunction obtained by the Irish Attorney-General and a subsequent High Court decision that forbade her to leave the jurisdiction for nine months. An appeal to the Supreme Court produced a ruling that the 1983 amendment did in fact provide for abortion when, as in this case, there was a real threat to the life of the mother through a possible suicide.116 The ‘X’ case complicated the 1992 referendum on the Maastricht Treaty, as the government had previously obtained a protocol in the Treaty designed to ensure that future EU law could not override the 1983 amendment. An attempt to regularize the situation with a further and more restrictive amendment failed to satisfy either side of the debate and was rejected.
To the disarray of the religious right was added the discomfiture of the Church as a result of a series of clerical sex scandals that dominated the media and fascinated and repulsed the public. In 1992 the Irish Times revealed that the high-profile Bishop of Galway, Eamonn Casey, had fathered a child when he was Bishop of Kerry in the 1970s. He had pressurized the mother to have the child adopted and then used diocesan funds to make payments to ensure the mother's silence.117 Even more damaging for the Church was a deluge of charges that there had been an institutional cover-up of the sexual and physical abuse of children by priests and members of religious orders. The dam broke in the autumn of 1994 when Father Brendan Smyth was convicted in a Belfast court of sexually abusing children. A subsequent television documentary revealed that he had a record of paedophilia in Ireland, the US and Britain that had been known to his own order and other Church authorities who had shielded him by moving him to another parish whenever complaints arose. Exposures of the physical and sexual abuse of children by members of religious orders, male and female, who had been responsible for running residential institutions quickly followed.
The author of a historical sociology of the Irish Catholic Church described the results of these scandals: ‘The media have driven a stake into the heart of the institutional church from which it will recover, but never fully. We will never see the likes of the Catholic Church's moral monopoly again.’118 Mass attendance rates had remained impressively high throughout the 1970s and 1980s, especially by international standards. As late as 1990, 85 per cent of those surveyed went to mass at least once a week. By 1997 this had dropped to 65 per cent.119 This was still high by international standards and, as one historian noted, ‘it would be wrong to write off the Catholic Church's grip upon the mores and the outlook of its Irish members.’120
Yet the Church's capacity to defend its power and influence was even more profoundly sapped by a sharp decline in vocations. Ordinations for the priesthood dropped from 412 in 1965 to forty-four in 1998, while there were even starker declines in the numbers of those entering the religious orders. Between 1967 and 1998 the total number of priests, brothers and nuns in Ireland fell from almost 34,000 to just under 20,000.121 An ageing, shrinking Church was unable to staff the schools, hospitals and other public services that provided much of the institutional basis of its power. The political significance of this was twofold. First, it removed the ‘Catholic card’ from electoral politics, to the disadvantage of the party that had been most proficient in using it: Fianna Fáil. Second, it revealed the hollowness of the argument that the main motivation behind Ulster Unionist resistance to Irish unity was a fear of Catholic power, as the weakening of the Church did little to undermine support for partition amongst the northern majority. Despite this, the political leader identified with this analysis, Garret FitzGerald, was responsible for the biggest political advance for Irish nationalism since partition.
The marginalization of those in the Fianna Fail leadership identified with a more conciliatory line on Northern Ireland provided Garret FitzGerald with an opportunity to establish Fine Gael as the sensible, moderate alternative on the North and Anglo-Irish relations. At a time of considerable tension over the hunger strikes and the Falklands War, this was an approach that appealed to an electorate that ranked Northern Ireland far down on the list of issues that would influence its vote. It also made FitzGerald seem more the sort of Taoiseach with whom Thatcher might do business.
In September 1981 FitzGerald had announced that he wanted to launch a crusade to create a ‘genuine republic’ with which northern Protestants would wish to have a relationship. He declared: ‘If I were a northern Protestant today, I cannot see how I could be attracted to getting involved with a state that is itself sectarian.’122 Although FitzGerald's willingness to criticize the Catholic ethos of the Republic and his desire to open up dialogue with unionists, rather than appeal over their heads to London, raised his popularity ratings in Belfast, the honeymoon was short-lived. His ‘constitutional crusade’ did not survive the pressures of the abortion debate, and the victories of Sinn Féin candidates in the Assembly elections put paid to his earlier objective of seeking a solution to the northern conflict through dialogue with the unionists: ‘I had come to the conclusion that I must now give priority to heading off the growth of support for the IRA in Northern Ireland by seeking a new understanding with the British government.’123
FitzGerald's decision to establish the New Ireland Forum in 1983 was related to an immediate political crisis: the threat posed by Sinn Féin to the SDLP. It was also prompted by Hume's idea that all the main constitutional nationalist parties on the island needed to produce an agreed statement of the principles believed to be at stake in the Northern Ireland conflict. This statement would then be the basis for an approach to the British government. The Forum comprised representatives of the SDLP, Fianna Fail, Fine Gael and the Irish Labour Party. Although, contrary to Hume's original idea, it was open to unionist participation, its stated purpose of unifying and revivifying the non-violent nationalist tradition ensured that none of the unionist parties participated, although some unionists gave evidence as individuals.
Professor John Whyte noted that the Forum, with government funding and a full-time staff, was in a position to make a weightier contribution to the discussion on Northern Ireland than any previous body on the nationalist side since the All-Party Anti-Partition Conference in 1949.124 Given that the latter resulted in little more than a restatement of old nationalist attitudes, this was not a very exacting criterion of success. In fact its final report was an unimpressive document. This in part reflected the need to ensure that Charles Haughey was kept on board. The demands of pan-nationalist unity amongst the constitutional parties ensured that the historical section was untainted by any of the ‘revisionist ideas’ that had increasingly influenced the professional writing of Irish history. Similarly, it was Haughey's veto power that resulted in all the party leaders agreeing to a unitary thirty-two-county state as the report's preferred constitutional option. It is true that the report referred to two other options – a confederal Ireland and joint authority – and that the latter implied an acceptance that a total British withdrawal might not be necessary for a solution of the Northern Ireland problem. However, as neither constitutional nationalism nor physical-force republicanism was any nearer to achieving British withdrawal in 1984 than they had been in 1949, this might be interpreted as a not very substantial concession.
That was certainly the predictable Ulster Unionist response. However, despite Thatcher's vigorous rejection of all three options at a press conference after her summit meeting with FitzGerald in November 1984, the Anglo-Irish Agreement did for the first time provide the Irish state with considerable leverage on the governance of Northern Ireland. Public opinion in the Republic was supportive of the Agreement and Charles Haughey's denunciation of it as ‘copper-fastening partition’ was not well received. As leading members of Fianna Fáil announced that the party was proud to be ‘the sole party with the nationalist forces’, Haughey appeared to take a position on the Agreement that was indistinguishable from that of Gerry Adams. Such extremism was damaging. Support for the Agreement rose from 59 per cent, with 32 per cent supporting Haughey's position in its immediate aftermath, to 69 per cent by February 1986.125 It was becoming increasingly clear that public opinion in the Republic, while still robustly nationalist, saw the Agreement as achieving a shift in the balance of power in Northern Ireland that favoured the SDLP and Dublin, while still keeping northern passions and violence at arm's length.
The unpopularity of Haughey's negative reaction to the Anglo-Irish Agreement had forced him to backtrack,126 and by the time of his resignation in 1992 his ambitions for the North did not seem to go beyond joint authority, a position he had execrated when it was supported by FitzGerald in the 1980s. In an analysis of public attitudes in the Republic towards Northern Ireland written two years after the Agreement, Peter Mair demonstrated that, while the aspiration to unity was pervasive, less than a third of the electorate was prepared to pay extra taxes to achieve it. Elections were fought and lost on economic issues. He concluded: ‘Irish voters will be primarily concerned about their pocketbooks for the foreseeable future while Northern Ireland will remain a foreign country.’127 While the Agreement would do much to increase the involvement of the Irish government in the day-to-day governance of the North, it did little to undermine popular aversion to what were seen as its two squabbling and murderous tribes.
Although the economic boom that began in the 1990s had its roots in the resurrected social partnership that Haughey's governments had developed from 1987, it did not provide his party with the electoral boost that Lemass's investment in economic programming and corporatism had given Fianna Fáil in the 1960s. Haughey was forced to resign in January 1992 when his former Minister for Justice, Seán Doherty, revealed his complicity in the phone-tapping of two journalists in 1982. However, even before the Doherty revelation, his leadership had been under renewed pressure because of increasing public concern at what became known as the ‘Golden Circle’: prominent businessmen who had used various sharp practices to make multimillion pound deals and whose accountants and lawyers had created complex structures to conceal their identities and reduce or eliminate their tax liabilities. The ‘Golden Circle’ had close personal and political connections with leading politicians.128 At the centre of these concerns was Larry Goodman, the dominant figure in the Republic's meat-processing industry. Goodman was a friend of Haughey and of other leading members of Fianna Fáil, and after Haughey returned to power in 1987 his business had received substantial assistance from the IDA and also from the Ministry of Industry and Commerce for an export credit insurance scheme to cover its beef exports to Iraq.129 The beef industry had long been the subject of allegations of corruption, and in May 1991 the ITV programme World in Action alleged that serious malpractices were commonplace in Goodman's plants. The PD leader in the coaliation, Des O'Malley, insisted on a tribunal of inquiry, which revealed that many of the allegations, including millions of pounds of tax evasion, were true.
Haughey's successor, Albert Reynolds, had as Minister for Industry and Commerce restored export credit insurance for the Goodman group's venture into the Iraqi market – insurance that had been withdrawn by the previous Fine Gael minister. A millionaire from Longford who made his money in dancehalls and dog food, there was never any suggestion of personal corruption on Reynolds's part. Nevertheless, the tribunal led to the collapse of the government when Reynolds accused O'Malley of committing perjury in his evidence and the PDs withdrew from the government. The subsequent general election produced a spectacular result for Dick Spring and the Labour Party, whose vote increased by almost 10 percentage points to 19.3 per cent – its highest since 1922 – and whose number of seats increased from fifteen to thirty-three. Fianna Fáil's vote declined to 39 per cent, its worst since 1927, while Fine Gael, which had been shaken by the emergence of the PDs, saw its vote decline by almost 5 percentage points to 24.5 per cent.130
Labour's victory had been anticipated in the 1990 presidential elections when, for the first time since the inauguration of the office, Fianna Fáil's candidate had been defeated. Spring had persuaded the constitutional lawyer and champion of divorce and contraception Mary Robinson to stand, even though she had resigned from Labour over the Anglo-Irish Agreement. The first woman candidate for the post, Robinson also gained the support of the Workers’ Party, the Greens and many women's groups. Her declarations of support for gay rights and for a radical improvement in the state's family planning services did not endear her to many male voters in rural Ireland, although her sex and some of the crasser attacks on her by male Fianna Fáil politicians may have led their wives and daughters to a different conclusion. There was a strong correlation between support for Robinson and a ‘progressive’ stance on abortion and divorce, leading one commentator to claim that ‘the “new Ireland” had emerged victorious after two referendum defeats’.131 This exaggerated the implications of Robinson's victory. The only region in which Robinson outpolled the Fianna Fáil candidate, Brian Lenihan, was Dublin city and county, and Lenihan's first-preference vote was 44.1 per cent to Robinson's 38.9 per cent. Robinson's victory came about through the distribution of the second-preference votes of those who supported the Fine Gael candidate, Austin Currie. Moreover, Lenihan was a seriously weakened candidate: during the campaign Haughey was forced to sack him from the cabinet after it emerged that in January 1982, upon the defeat of the coalition government, Lenihan had phoned the President to try to persuade him not to dissolve the Dáil.
Labour's surge in 1992 was in part a product of the ‘Robinson effect’, but it was also a reflection of widespread public perception of a Fianna Fáil political class embroiled in sleaze. Neither of these factors would continue to favour the party once Spring shocked many of his party supporters by entering into a coalition with Reynolds. After the collapse of the Reynolds government in 1992, Spring had told the Dáil it was impossible to envisage entering into partnership with a party that ‘has gone so far down the road of blindness to standards and blindness to the people they are supposed to represent’.132 However, after the election Spring displayed no real enthusiasm for John Bruton's proposal of a ‘rainbow coalition’ including Fine Gael, Labour and the Progressive Democrats. This reflected the deep-rooted hostility of Spring to Bruton, which had its origin in bitter clashes between the two when they were in the 1983–7 coalition. Spring was also concerned that neither Fine Gael nor the Progressive Democrats would countenance the participation of Democratic Left in the coalition. This party had been formed when six of the seven Workers’ Party TDs had split from the organization in March 1992 over their disquiet about revelations of the continuing links between leading members of the WP and the Official IRA in Northern Ireland.133 Labour, watchful of its left flank, went through the motions of negotiating a platform with Democratic Left to construct a centre-left government with Fine Gael, but this became academic when after a series of recounts it was confirmed that the Democatic Left had lost its Dublin South-central seat, robbing the centre-left option of sufficient Dáil support.
Although some of Reynolds's colleagues were hostile to the idea of a coalition with Labour, Brian Lenihan welcomed the possibility of a return to Fianna Fáil's social republican past. Spring had sent Reynolds a paper drawn up by Labour and Democratic Left during their negotiations and Fianna Fáil's response was drafted by the Taoiseach's special adviser, the Oxford-educated historian Dr Martin Mansergh. Although the perceived incongruity between his Protestant, Anglo-Irish background and his strong republican line on Northern Ireland was to make him a figure of fascination for many journalists, another side to Mansergh's intellectual make-up was important in the formation of the coalition. This was his firm conviction that Fianna Fáil's social-republican and corporatist tendencies had been the real source of its hegemony in Irish politics.134 Such thinking eased Labour's way into government, but the process was also greatly assisted by Reynolds's apparent success at the Edinburgh EU summit, where he claimed to have secured £8 billion for Ireland in structural and cohesion funds up to 1999. This made it easier to implement those elements of Labour's programme that involved a commitment to extra expenditure on health and social welfare, which in turn enabled Reynolds to insist that Labour accept the budgetary constraints imposed by the Maastricht Treaty. All of the Labour demands on the ‘liberal agenda’ and the issue of sleaze were included in the programme for government, with commitments to an Ethics in Government Bill, Dáil reform, the introduction of divorce, abortion legislation and the decriminalization of homosexuality. Labour's stunning electoral performance was also recognized in an unprecedented profile in government. It had six of the fifteen cabinet posts and a special office of the Tánaiste was created, situated in government buildings, with its own staff and budget, to strengthen Spring's position in the cabinet.
Despite such an apparently auspicious beginning, including a Dáil majority of forty-two, the largest in the history of the state, the coali-tion was characterized by internal conflict almost from the start. In part this reflected a serious personality clash between Reynolds and Spring: ‘The two men were like chalk and cheese and seemed always prepared to think the worst of each other. In contrast to Reynolds's bright and breezy style, Spring was thoughtful and reserved and quick to take offence.’135 Such tensions were exacerbated by Labour's increasing dissatisfaction with Reynolds's failure to rein in Fianna Fáil's proclivity to favour its business allies and his tendency, when the need arose, to behave as if he were leading a single-party government. Spring, conscious of the shock that his move into government with Fianna Fáil had caused many of those who had voted Labour in 1992, was determined that Labour would play a high-profile and assertive role in government. Labour insisted on a new system of ministerial programme managers whose job it was to ensure that the coalition deal was implemented. The programme managers appointed by the six Labour ministers were all Labour Party activists, and the party shocked some of its supporters in the media by the extent to which political and familial nepotism influenced its appointments from special advisers to secretaries and drivers.136
In 1993 Reynolds insisted on a new amnesty for tax evaders, the second in five years, which was opposed by his own Minister for Finance Bertie Ahern and which deeply troubled many Labour supporters already annoyed by the government's first budget in 1993, which had increased taxes on ordinary workers and imposed a 1 per cent income levy.137 Labour supporters were also uncomfortable with the 1994 Finance Bill, which relaxed the tax regime for wealthy expatriates, and with the so-called ‘Masri affair’, which also became public in 1994. It was alleged that two members of the Masri family, who had been granted Irish citizenship under a Business Migration Scheme, had invested £1 million in a pet-food company that was owned by the Reynolds family. Reynolds in turn was exasperated with what he regarded as Labour's refusal to face up to hard economic decisions: in his view, the budget was a response to a difficult economic situation, which included a rise in unemployment and a currency crisis that had forced a devaluation of the Irish pound.
He and his colleagues were also deeply resentful about Labour's pose as the moral mudguard of the coalition. This was the context in which Reynolds ignored a cabinet decision that the forthcoming report of the Beef Tribunal would be studied before the government issued its collective response. Instead, fearing that Labour would use the report to undermine him, Reynolds had the report scrutinized by his own advisers and then issued a statement that the report had vindicated his role in the affair. Spring was furious at having been ignored – the Taoiseach refused to accept his phone calls while the report was being studied – and his supporters claim he remained in government only because of the delicate state of the peace process in Northern Ireland.138
It was in the area of Northern Ireland policy that the Reynolds–Spring coalition registered its major success. Reynolds had inherited the ongoing contacts that Haughey had initiated with Sinn Féin but was able to develop these within the context of a new engagement with John Major, the British Prime Minister. Taking up John Hume's idea that a joint declaration by London and Dublin on the basic principles of a settlement could create the conditions for an IRA ceasefire, he displayed a ruthless pragmatism and a willingness to accommodate the constitutional concerns of Ulster Unionists. The result was the Downing Street Declaration of December 1993, with its subtle combination of ‘green’ language and democratic content. Further inducements were proffered to republicans, including an end to their banishment from the airwaves in the Republic and an Irish version of a proposed Anglo-Irish Framework document that provided a ‘dynamic’ set of North–South institutions that republicans could envisage as ‘transitional’ to a united Ireland. Reynolds persuaded President Clinton to allow a visa to Gerry Adams for a visit to the US. In return, Reynolds made it clear that the only response he would be satisfied with was a permanent end to violence; the alternative was a deal with Major, the Unionists and the SDLP, which would leave republicans isolated.139 The IRA's announcement of a ‘complete cessation of military operations’ on 31 August 1994 was to a large extent Reynolds's achievement: his blunt businessman's approach with its lack of ideological baggage on the North, and above all his willingness to take major risks, had paid off.
This success was double-edged, for it was very much the Taoiseach's, and Spring, despite his role as Foreign Minister and a history of Anglo-Irish involvement going back to 1982, was marginalized. In fact, it is doubtful whether Spring's background and his political base in ‘republican’ Kerry would have allowed him to deal as robustly with Sinn Féin as Reynolds had done. Meanwhile, radical deterioration in relations between the coalition partners had occurred over Reynolds's treatment of the Beef Tribunal report. A terminal blow was struck in November 1994, when Reynolds insisted on appointing Attorney-General Harry Whelehan as President of the High Court. Spring had opposed Whelehan, who was a conservative with no judicial experience, and when it transpired that the Attorney-General's office had been responsible for a delay in the processing of an extradition warrant for a paedophile priest and that a similar case had occurred in 1993, the Labour ministers resigned from the government and Reynolds stepped down as leader of Fianna Fáil, to be replaced by Bertie Ahern.
Fine Gael, Labour and Democratic Left, whose Dáil strength had increased to six TDs after two by-election victories, were able to form a ‘rainbow coalition’ in December 1994, with John Bruton as Taoiseach. Labour retained six cabinet seats while the Democratic Left leader, Proinsias de Rossa, became Minister for Social Welfare and three of the party's TDs were appointed Ministers of State. The three parties established a good working relationship, and there was no repeat of the divisions that had been a feature of the previous administration. Tensions did exist between Spring and de Rossa on Northern Ireland because of the latter's hostility to Sinn Féin and his sympathy for mainstream Ulster Unionism. This was particularly so after the coalition's greatest setback: the ending of the IRA ceasefire in February 1996. Republicans blamed Major for allegedly using the question of IRA weapons as an obstacle to ‘conflict resolution’ and, supported by Albert Reynolds, they criticized Bruton and de Rossa for being accomplices in ‘British intransigence’. Spring's most influential adviser, Fergus Finlay, publicly established clear green water between Spring and his government partners by declaring that talks without Sinn Féin were ‘not worth a penny candle’.140
One of the most notable effects of the peace process after 1992 was the increasing ‘Ulsterization’ of politics in the Republic, as there was a qualitative increase in the amount of time and energy that the Republic's political class had to invest in the developing political situation in the North. Public opinion in the Republic was also affected as, for the first time since 1969, there appeared to be a real possibility of an end to violence. The effects were complex. On the one hand there was a willingness to jettison more traditional forms of irredentism and, in 1998, support what was essentially a ‘two states – one nation’ settlement. On the other there was an upsurge in uncritical support for northern nationalism, once it appeared that its violent cutting edge could be discarded. That the IRA went back to war in February 1996 was put down to John Major's indulgence of Ulster Unionist intransigence, an interpretation that was then considered vindicated by the sectarian stand-off over the Portadown Orange Order's desire to march down the mainly nationalist Garvaghy Road. During the 1997 general election campaign Bertie Ahern attacked Bruton's handling of the peace process, asserting that it was the duty of the Taoiseach to act as leader of ‘Nationalist Ireland’. Sinn Féin won its first seat since 1957 when its candidate topped the poll in Cavan–Monaghan. Although its overall vote at 2.5 per cent was still small, it had overtaken Democratic Left, and good polls in Kerry and inner-city Dublin showed a substantial potential for growth. This potential was all the greater given the increasingly fragmented nature of party support in the Republic.
Fianna Fáil's performance was not impressive in terms of votes: it was only marginally up on 1992 at 39.3 per cent, although a more effective vote-management strategy brought it an extra nine seats. Fine Gael had been rescued from the doldrums by Bruton's performance in government and its share of the vote increased from 24.5 per cent to almost 30 per cent, gaining it an extra nine seats. Labour paid the price for its embrace of Reynolds, with its vote almost halved to 9 per cent and its number of seats dropping from thirty-three to seventeen. Although the Progressive Democrat vote held up at just under 5 per cent, it lost six of its ten seats. Bertie Ahern was able to construct a minority coalition government with the PDs that was dependent on the support of some of the plethora of independents who had been elected.141
Fine Gael had begun to portray itself as the leader of a social democratic alternative to a conservative Fianna Fáil–PD alliance. Bertie Ahern, who had been a trade union activist before entering full-time politics, was unlikely to accept such a right-wing designation for his party, and the strong performance of the economy made it easier to avoid the traditional tough choices between expenditure and tax cuts. His government's position was also strengthened by his role in the Northern peace process and, above all, by the Good Friday Agreement. Fianna Fáil's choice of a northern Catholic, the Queen's University law professor Mary McAleese, as its presidential candidate when Mary Robinson resigned in 1997 was the first indication of how ‘Ulsterization’ could benefit Fianna Fáil. McAleese was an example of a new breed of younger, upwardly mobile Catholics who had benefited from reformist direct rule. Self-confident in their nationalism, they regarded a non-violent republican movement as a more effective voice than the increasingly tired and middle-aged SDLP.
After the IRA cessation Sinn Féin's leaders had many fewer occasions to appear as apologists for violence and instead projected themselves as calm, reasonable, and earnest men who talked about peace. For younger voters with no direct experience of atrocities like Enniskillen, Teebane Cross or the Shankill Road bombing, Sinn Féin became an increasingly attractive anti-establishment political force. A survey of school students carried out by the National Youth Council of Ireland in 2000 showed that it was the second most popular party after Fianna Fáil and had almost as much support as Fine Gael, Labour and the Greens put together.142
Sinn Féin, despite the IRA's bloody history and involvement in criminal activities including armed robberies and smuggling, did not hesitate to denounce the immorality of the Republic's political elite. Certainly the scale of corruption involving senior political figures, most of whom were members of Fianna Fáil, proved substantial, as evidenced by the results of the two tribunals of inquiry set up to investigate first, the finances of Charles Haughey and second, the way the physical planning process had been distorted by developers' payments to Dublin-based TDs and councillors. But its political impact was relatively muted.
Although Fianna Fáil did not win any of the five by-elections held during the new Dáil, it did reasonably well in the local and European elections held in 1999, and there was little evidence of a revival of the main opposition parties. Labour under a new leader, Ruairi Quinn, had merged in 1998 with Democratic Left. The new organization faced a challenge in the most deprived working-class neighbourhoods from Sinn Féin, which imported the potent mixture of populist nationalism and vigilante justice for local drug dealers and petty criminals it had perfected in the North. Fine Gael, which had fought the 1997 election on left-of-centre commitments to a more equitable tax system and the need for radical improvements in public services, did not sustain this dynamic in opposition. As its support in opinion polls slumped,143 a sizeable section of the party in the Dáil blamed John Bruton's leadership style, stiff and didactic, and his alleged pro-Unionist bias on the North. However, his successor, Michael Noonan, more populist and more nationalist, did not produce any improvement in the party's poll ratings.
Despite his former political association with Haughey and the embarrassment caused by the revelation that his Minister for Foreign Affairs, Ray Burke, had received a £30,00 political donation from a building firm in 1989, Ahern was not damaged by the corruption issue. This must be linked to the astonishing performance of the Republic's economy. Growth rates at around 10 per cent a year were unprecedented, and unemployment fell from 10 per cent to under 4 per cent for the first time in the history of the state. The result was that, as one financial journalist put it, ‘normal rules of budgetary policy did not seem to apply, every budget brought lower taxes, higher spending and the promise of more to come.’144 The Minister for Finance, Charlie McCreevy, was able over four budgets to make substantial cuts in direct taxation. The main beneficiary was the business community and high earners: corporation tax was cut from 36 per cent to 16 per cent and capital gains tax was halved, while probate tax was abolished. The large surpluses generated by the boom permitted substantial tax benefits to workers as well: there were substantial cuts in the standard and top rates of income tax and a widening of the standard rate band.145 Increasing private affluence, while it greatly strengthened the goverment's ability to insulate itself from the revelations of sleaze, did not prevent it from being criticized for ignoring the evidence that, while the Republic was now one of the richest countries in the EU, it was also one of the most unequal, with a crumbling infrastructure and seriously underfunded public services. Social spending fell as a share of GDP during the period 1997–2001, and, according to the United Nations Human Development Report, the Republic had the second highest level of poverty in the developed world.146
Issues of who benefited from the Celtic Tiger became more pressing when, in 2001, it appeared that the years of spectacular boom might be over. The economic downturn reflected the global slowdown in the information and communications technology sector on which Ireland was particularly dependent. Even before the events of 11 September, the Republic had been hard hit by the recession. As the IDA calculated that 6,500 multinational jobs were lost in 2001 and the economy's rate of growth slumped from 11 per cent in 2000 to 3 per cent,147 the Governor of the Central Bank declared the era of the Celtic Tiger was indeed over.148
The coalition's response was one of ambivalence. Some ministers, including McCreevy and the Tánaiste and PD leader Mary Harney, continued to articulate a strong neo-liberal response, criticizing the EU for its ‘outmoded philosophy of high taxation and heavy regulation’ and declaring that the Republic was ‘spiritually closer to Boston than Berlin’.149 Others, including the Taoiseach, rediscovered Fianna Fáil's social democratic vocation and Ahern even called himself a socialist.150 The conflicting messages contributed to the government's major defeat on the Treaty of Nice Referendum in June 2001. The Treaty was designed to make the institutional reforms to EU decision-making structures necessary for enlargement. Supported by all the main parties, the trade unions, employers, farmers’ organizations and the Irish Catholic bishops, it was nevertheless rejected by 54 per cent of the third of the electorate who bothered to vote.
The two parties that had been active in the anti-Nice campaign, the Greens and Sinn Féin, put a radical, anti-militarist gloss on the result. However, it appears that the biggest factor leading to a ‘no’ vote was what one academic labelled a ‘growing independence sentiment: the feeling that Ireland should do all that it can to protect its independence from the EU’.151 With the Republic now too rich to enjoy ‘objective one’ status and the access to structural funds that it provided and with the prospect of having to compete for EU resources with the prospective new members from the former Soviet bloc, Irish Euro-scepticism reflected insular self-interest more than some radical anti-system agenda. The darker side of Irish Euro-scepticism was also seen in increasing evidence of racism and antagonism to foreign workers and asylum seekers. However, it was also the case that the low turnout had reflected the failure of the political elite to overcome the indifference and lack of interest of a large section of the public in European affairs in general and the Nice Treaty in particular. In a rerun of the referendum in October 2002, the governing parties, and Fianna Fáil in particular, ran a much more intensive and effective campaign. The result was an increase in turnout of 15 per cent and a victory for the ‘yes’ campaign of 63 per cent to 37 per cent.152
Ahern suffered another reversal when the government held a referendum on abortion in March 2002. Hoping to tidy up the situation created by the ‘X’ case, the government proposed to remove the threat of suicide as a justification for a termination. Ahern had given a pledge to deal with the issue during the 1997 campaign and had made a post-election commitment to hold a referendum to four of the Independent TDs who supported the government. Despite the support of the Catholic Church and the main ‘pro-life’ groups, the government's amendment was narrowly defeated: 49.58 per cent to 50.42 on a turnout of 42.89 per cent. There was a clear urban–rural divide with Dublin, Cork, Galway and Limerick voting ‘no’ and the predominantly rural constituencies voting ‘yes’, and the turnout in urban areas was higher than that in the countryside. As one commentator noted, ‘Never before has the electorate refused to yield before the full force of Rome and the Republican Party.’153
Despite his setbacks on Nice and abortion, and despite the economic slowdown, Ahern's reputation for competence, even statesmanship, which had been gained through his role in the peace process, remained a major asset to Fianna Fáil. It helped to cement Fianna Fáil's success in the general election in May 2002. Fighting on the slogan ‘A Lot Done, More to Do’, the party portrayed itself as the only political force large enough and coherent enough to maintain prosperity in a more unstable international environment and at a time of increasing evidence that there had been a serious deterioration in the public finances during 2001.154
Fine Gael, which had alienated some of its core support with Noonan's more nationalist stance on the North, further disconcerted them with a manifesto full of spending commitments that allowed Fianna Fáil to attack it for irresponsibility. Fine Gael's incoherence and its low poll ratings led to large-scale defections by its supporters to Labour, Fianna Fáil and the Progressive Democrats, who appealed to the electorate to deny Fianna Fail an overall majority and ensure that they could continue to act as a governmental restraint on the larger party. Labour refused Noonan's plea for a pre-election pact, but, like Fine Gael, it underestimated the electorate's preference for governmental stability over specific spending commitments. In addition, Labour's implicit commitment to a centrist coalition meant that it failed to benefit from the substantial anti-establishment vote that went to Sinn Féin, the Greens and the Independents.
The result was a triumph for Ahern and a disaster for Noonan. Fianna Fáil's vote rose by over 2 per cent to 41.7 per cent and its number of seats from seventy-seven to eighty-one. Fine Gael's vote fell by 5.5 per cent to 22.5 per cent, while its seats plummeted from fifty-four to thirty-one. In Dublin it was left with only three TDs, putting it in fifth place. Labour's vote fell by 2 per cent to 10.77 per cent, although it returned with the same number of seats: twenty-one. The Progressive Democrats, despite a small decline in their vote (0.72 per cent to 3.96), doubled their number of seats to eight. Sinn Féin's vote increased by 4 per cent to 6.5 per cent and its number of seats from one to five. The Green vote increased by 2 per cent to 3.85 and its seats from two to six. There would be a record number of Independents in the new Dáil: fifteen.155
For the first time since 1969 an outgoing government had been re-elected. The election seemed, to some commentators, to portend radical change in the Irish party system. There was much talk of a terminal crisis of Fine Gael.156 In fact, the key shift in the system had occurred over a decade before, in 1989, when Fianna Fail had given up its ‘principled’ opposition to coalition government.157 Fine Gael's future would depend on the attitude of the Labour Party towards Fianna Fáil, and here the prognosis was not so bleak. Ruairi Quinn, the Labour leader, resigned in August 2002, and his successor, elected by the new system of one-member, one-vote, was Pat Rabbitte, TD for Dublin South-west and a former junior minister in the 1994–7 Rainbow Coalition. Rabbitte had been a leading member of the Workers' Party and its successor, Democratic Left, which merged with Labour in 1999. He brought to the leadership of the party strong intellectual qualities and a reputation as perhaps the Dáil's most effective performer. He was also influenced by the Workers' Party tradition of hostility to traditional Irish nationalism, particularly that associated with Fianna Fail and Sinn Féin. Here he was in tune with the attitudes of those party members who preferred to seek coalition with Fine Gael and the Green Party, rather than with Ahern's party, and who were hostile to Sinn Féin.158
The governing coalition's popularity slumped in the two years after the election. A pre-election spending spree had been followed by a series of cuts in services and the postponement of the implementation of some key election promises in areas like hospital beds and Garda numbers. Fianna Fail paid a high price for these adjustments in the local and European elections in June 2004. Its share of the vote fell to 32 per cent, its lowest since 1927.159 While Fine Gael's vote declined slightly, they won a number of extra seats and their new leader, the Mayo TD Enda Kenny, had the added compensation of winning an extra seat in the European elections, where Fine Gael emerged as the largest party, with five of Ireland's thirteen seats: 160 Labour's performance was strong in Dublin, where it emerged as the largest party, and it did well in the east of the country and the larger urban areas. Perhaps most importantly, its vote held up in spite of a surge in support for Sinn Féin. This was the most dramatic feature of the elections, with the party's support more than doubling and the acquisition of a European seat in Dublin.
Sinn Fein's vote was distinctive in geographical and class terms, being particularly concentrated in the working-class districts of major urban centres and in the border constituencies – its largest support was in Monaghan (31 per cent) and Dublin city (18.5 per cent). Its gains were strongly correlated with losses in Fianna Fáil support, suggesting that, although it is often presented as a left-wing alternative in Irish politics, it is more interested in moving into the territory of the mainstream Irish parties. Here it benefited from the media's focus on the central role of its leading members in the northern peace process. Adams ranked as one of the most popular political figures in the country, getting higher satisfaction ratings than either the Labour or Fine Gael leaders in an Irish Times poll conducted a month before the Northern Bank robbery in Belfast that was attributed to the IRA.161
After the electoral bruising in June 2004, Bertie Ahern announced that the government would listen to the voters. One result was his public declaration that he was a socialist. Another manifestation of Fianna Fáil's repositioning was a ‘think-in’ of the parliamentary party, addressed in September 2004 by Father Seán Healy of the Conference of the Religious of Ireland, on the subject of ‘social inclusion’. Healy's address, which advocated greater income and wealth redistribution, was followed by the departure of the Minister for Finance, Charlie McCreevy, for Brussels. McCreevy was blamed by backbenchers for contributing to the election losses because of his ‘right-wing’ tone, and it was hoped that his replacement, Brian Cowen, would re-establish the party's social-democratic image.162
By early 2005 there had been a marked recovery in the popularity of the government. This reflected an improvement in the economy after the post-election slippage. But the government still faced high levels of criticism on a range of issues, from inadequacies in the health service to ill-treatment of patients in state-funded nursing homes. More important was the intent on the part of Labour and Fine Gael to work out a pre-election pact. Ahern's response to the emergence of a more coherent opposition was to allege that it would be dominated by Labour's ‘tax-and-spend’ philosophy and would ‘bring us all back to the Third World in “jig time’”.163 This pronouncement came during another ‘think-in’, which was addressed by the American social theorist Robert Putnam; his analysis of social capital and the decline and revival of community in the US was declared by the Taoiseach to be of ’central relevance to Ireland. Rabbitte immediately responded to Ahern's attack by making it plain that a government of which Labour was a part would not increase income or corporation tax, although it would address the issue of tax loopholes for the rich and would consider a wealth tax. As one political scientist noted, there were few significant differences between the policy positions of Labour, Fianna Fáil and Fine Gael on the economy. But she also noted, on the basis of a survey of election candidates in 2002, that, while there was a convergence of economic and social policies, there remained a long-standing difference in the political identities of Fianna Fail and Fine Gael. This difference was a product of the parties’ different positions on the ‘national question’ and Northern Ireland. Fianna Fáil's self-image of being more authentically republican than the other main parties was connected with a tendency to appropriate the Northern Ireland issue and suggest that both Fine Gael and Labour were less trustworthy custodians of the national interest.164 Ahern did not let his eulogy for Putnam divert him from pointing out that Fianna Fáil was ‘“The Republican Party” devoted to achieving unity by consent… because I am an Irish Republican no issue means more than this to me.’165
There had been since the 1920s a struggle between Fianna Fáil and Sinn Féin to appropriate the identity of ‘true’ republicanism. The peace process had given a major boost to Sinn Féin in this competition. Nevertheless, Fianna Fáil could claim to have played a key role in bringing republicans into the process, while the continuing evidence of repub-can involvement in paramilitary and criminal activity put a limit on Sinn Féin's appeal to the electorate. However, if the IRA statement of July 2005 renouncing armed struggle turned out to be as historic as Ahern claimed, then not only would Sinn Féin be likely to win new Dáil seats at the next general election, but it would also have removed the major objection to its inclusion in government. Already one member of the government, the Minister for Foreign Affairs and TD for Louth, Dermot Ahern, had floated the possibility of Sinn Féin being in government after the next general election. This was a prospect with profound implications for North–South relations and unionist attitudes to the Republic. Although Ahern subsequently proclaimed that Sinn Féin's ‘Marxist’ economic policies would rule it out as a coalition partner, his decision to revive the official military parade to celebrate the Easter Rising and support for extending speaking rights to Northern Ireland MPs demonstrated the success of Adams's party in ‘Ulsterizing’ political debate in the Republic. Whether such a tendency would be welcome to an electorate whose patriotism had a traditionally twenty-six-county focus remained to be seen.