Ireland Since 1939

by Henry Patterson

  The negotiations that led to the signing of the Anglo-Irish Agreement by Thatcher and FitzGerald at Hillsborough Castle on 15 November 1985 had taken two years to complete, and, although the leader of the SDLP was kept in close touch with their contents by the Irish government throughout, the leaders of Unionism were excluded from the process. For Thatcher the prize was to be enhanced security cooperation from the Republic and the possibility that the majority of northern nationalists would support or acquiesce in the constitutional framework of the state in which they lived. The price she was willing to pay was a new role for the Republic in the governance of Northern Ireland.

  Thatcher was adamant that formal British sovereignty over Northern Ireland was untouchable and ruled out FitzGerald's favoured option of joint authority. However, senior British officials, including the Cabinet Secretary, Sir Robert Armstrong, and the Foreign Secretary, Sir Geoffrey Howe, were in favour of a radical initiative that would undermine the republican challenge even at the cost of unionist outrage. They represented a section of opinion in Whitehall that saw the initiative as a first step in the process of decoupling Northern Ireland from the rest of the UK, precisely because the province was a drain on the political and economic resources of the British state.

  At the time of her summit with FitzGerald in November 1984, when she publicly rejected all three constitutional options proposed by the New Ireland Forum, it appeared that Thatcher had turned her back on any notion of a new departure in Northern Ireland policy. It was certainly the case that her increasing conviction that the Republic would not be able to offer constitutional recognition of a new dispensation in Northern Ireland by removing Articles 2 and 3 from its constitution had made her more reluctant to innovate. The IRA's bombing of the Grand Hotel in Brighton during the Tory Party conference in October, which nearly killed her and did kill several leading Conservatives, had the same effect. It was Thatcher's ardent pursuit of the ‘special relationship’ with Washington that allowed the Anglo-Irish initiative to be resurrected.

  Up until the 1960s the ‘special relationship’ had made US presidents reluctant to voice opinions on Northern Ireland, and the State Department was regarded by Irish diplomats as having a pro-British bias on the issue of partition. However, during the 1970s the Department of Foreign Affairs under FitzGerald had made a concerted effort to increase Irish influence in Washington in order to marginalize support for the IRA and increase the influence of constitutional nationalism. Together with John Hume, FitzGerald and Seán Donlon, the Irish Ambassador, had built up a powerful support base on Capitol Hill centred on four influential Irish-American politicians: Senators Edward Kennedy and Daniel Patrick Moynihan, Governor Hugh Carey of New York and the Speaker of the House of Representatives, ‘Tip’ O'Neill. The ‘Four Horsemen’ had issued a joint statement on St Patrick's Day 1978 criticizing the lack of political progress under direct rule and alleging violations of civil rights by the security forces. They had been responsible for President Carter's unprecedented declaration that the US would support a deal in Northern Ireland involving the Irish government. Most worryingly for London, it was their pressure that was behind the decision of the State Department in 1979 to suspend the sale of handguns to the RUC.165 It was US pressure too that had led Thatcher, very much against her own instincts, to promote all-party devolution talks under her first Secretary of State for Northern Ireland, Humphrey Atkins, and that proved decisive in getting stalled negotiations restarted after Thatcher, post-Forum fulminations. Speaker O'Neill wrote to Reagan shortly before a Thatcher–Reagan summit in December 1984 urging him not to tolerate British retrenchment. O'Neill had unprecedented leverage with Reagan because of his record of opposition to US funding of the ‘Contras’ – the counter-revolutionaries fighting against the Sandinista government in Nicaragua. The muting of O'Neill's criticism on Nicaragua was the price of the Irish state's most important political advance in relation to Northern Ireland since partition.166

  At the core of the Agreement was the creation of an Anglo-Irish Inter-Governmental Council jointly chaired by the Secretary of State for Northern Ireland and the Irish Minister for Foreign Affairs. It was to be serviced by a joint secretariat of Irish and NIO officials based in Belfast. The conference was to deal on a regular basis with political, security and legal matters, including the administration of justice and the promotion of cross-border cooperation. The British government committed itself, in what was an international treaty, to make ‘determined efforts’ to resolve any differences that arose within the Council. Although all this fell short of joint authority, the British claim that it was simply an ‘institutionalization’ of normal consultation with Dublin was not taken seriously in the Irish capital, where the Agreement was accurately characterized as giving the southern state ‘a foothold in decisions governing Northern Ireland’.167 Writing in August 1985, John Cole, the BBC's political editor, referred to the ‘booby prize’ that awaited Anglo-Irish strategy: ‘The booby prize is when the Agreement is not good enough to attract the Nationalists and worrying enough to send the Unionists over the top.’168

  It was soon clear that Thatcher had indeed won the booby prize. The unionist community in Northern Ireland was united in angry rejection of the Agreement, or ‘Diktat’, as it was almost instantly christened. At the same time, although the expanding Catholic middle class greeted direct rule with a Dublin input as an ideal political framework, the core areas of working-class support for the IRA showed little sign of being impressed with the new dispensation. Although support for Sinn Féin had peaked before the Agreement, there was no indication that it was now threatened by an electoral meltdown, while IRA activity continued unabated and the actual level of violence increased. However, while the Agreement was initially denounced by republicans as part of a British counter-insurgency strategy, it would soon contribute to a major republican rethink of the role of armed struggle.

  9. From Crisis to Boom: The Republic 1973–2005

  Industrialization by Invitation

  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 governm
ent'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 National Coalition 1973–1977

  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 i
ssues 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.