Category: Archive

Dublin Report Soaring fuel costs a threat to Celtic Tiger

February 16, 2011

By Staff Reporter

By John Kelly

It’s a case of Dublin the quare oul’ times, as I write this column. And no, I am not sitting in a traffic jam, laptop on knees, although it would be perfectly possible. Dublin motorists are currently being held for ransom as trucks crawl around vital traffic intersections at the penny farthing speed of one mile per hour.

By no means is it confined to the always hard-pressed metro. The protest against high tax rates on fuels, gasoline and especially diesel, is nationwide. Cities like Waterford and the diminutive Kilkenny were reported to be worst affected.

One Waterford motorist complained that it had taken him two hours to travel two miles.

It is not just Dublin in the quare oul’ times; it is Ireland.

Tough and all as it may be for beleaguered travelers, the predicament is nothing compared to the rest of Europe.

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Just as in 1789, when a certain revolution took place, it started in "La Belle France."

There, a few short weeks ago, as tourists thronged French car ferry ports, especially British, attempting to return home, truckers brought the summer holidays to a clanging end.

The protest, tough and all as it was on uninvolved travelers, succeeded. The French government capitulated.

Like the revolution, the general discontent was then exported throughout the member states of the European Union.

Ireland’s demonstration came late in the game, even following the UK, where refinery blockades marked the first really stern test for Tony Blair’s Labor government, one that he still has not solved.

Since Ireland does not really have any refineries to shout about, other than Whitegate in Cork, truckers here decided to stage the 24-hour traffic slowdown by driving at snail’s pace around strategic road and intersections throughout the country.

The taoiseach, Bertie Ahern, took a similarly firm stance as his counterpart Blair. There would be no capitulation to pressure, he insisted. But he softened that particular blow with an escape clause, indicating that it could be dealt with only in the budget, which is due in 10 weeks.

Not for the first time were the beneficiaries and leaders of the Celtic Tiger forced to the realization that however superficially wealthy and successful it may be, it still is an economy that is held in thrall by external forces.

Indeed, the whole of Europe was forced to a similar conclusion.

Massive protests were also staged in Spain, Germany, Belgium, Denmark, Sweden and Portugal.

In the eye of the storm, the German government pledged that not alone was it not going to reduce taxation on fossil fuel in line with its aim to prevent global pollution, it even plans to increase rates next year.

The Belgian government, on the other hand, faced with paralyzing demonstrations, capitulated. It promised truckers that it would introduce registration charge concessions next year.

European governments, caught almost totally by surprise at the extent and the effect of the supra-national demonstrations, are now attempting to convince OPEC, the organization that controls almost all of the oil supply they depend on, to increase production in order to cut rapidly increasing costs.

Truckers, for their part, who now control the great bulk of European cargoes, just like truckers in the U.S., insist that they cannot continue to operate without imposing significant price increases.

Such increases would add hugely to inflation within all of the member states at a time when the euro is coming under increasing pressure from the continually strengthening U.S. dollar.

The effect could be disastrous, especially for Ireland, which has already experienced major inflationary increases within the last year. The sudden threefold increase came about partly as a result of the last budgetary increases on items such as cigarettes, but mainly as the result of external factors such as the price of oil. During the continued adjournment of the tribunals, which have fascinated the Irish public throughout the year, there has been a significant shift in political preoccupations.

While the Moriarty Tribunal is due to resume this week with C.J. Haughey as the main witness, the state of the economy has become center stage in public attention. In part, this had quite a lot to do with the disastrous AGM of the privatized Eircom.

Hugely flaunted as a good buy for Irish shareholders when it was privatized, the former Telecom Eireann, Ireland’s monopolistic state-owned communications company, has driven gullible investors down an incredibly rocky road. Those who did not sell out immediately for a quick profit have now ended up losing quite a lot, depending on their initial investment.

The result was that Eircom’s directors, including the former Foreign Minister Dick Spring, and its chairman, Ray McSharry, faced the most tumultuous AGM probably ever held in Ireland.

Spring, in particular, was pilloried by speaker after speaker. Among the most vociferous critics was Sen. Shane Ross, who, along with Eamon Dunphy, who is famous for being famous, gathered thousands of proxy votes in a futile attempt to remove the directors.

On the broad economic front, it represented something of a sideshow. But it also revealed the real anger that many Irish people harbor against the much-vaunted Celtic Tiger. Quite simply, many feel that the alleged benefits have blithely passed them by.

In the autumn of this discontent, Ahern and his coalition government face an increasingly steep uphill battle, one that will worsen considerably if oil prices increase further, as seems likely.

Not just trucking companies and motorists face big increases. Home heating fuel prices have also hiked quite steeply virtually by the day. The shattered value of the euro has also led to further domestic increases since Ireland does so much of its trading with UK companies, all of whom have had to increase prices because of the currency difference.

The increasing inflation has also cancelled out pay increases agreed by employers and unions under the umbrella of the National Partnership. One clause in that last agreement allowed for wage renegotiations in the event that inflation outpaced increases. Nobody disputes the fact that it has. Compensatory increases will fuel it further.

The Celtic Tiger has been hit quite hard. The injuries are not fatal, far from it. But the powerful animal, the economic phenomenon of Europe, is certainly limping.

Winter will be tougher this year.

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