The problem of the punt
Christopher Walker
Dublin Until a few months ago, Dublin was enjoying a new and unfamiliar role as a haven for business journalists searching for a fresh European economic 'miracle'. As capital of the country with the fastest growth rate inside the EEC, it was also blessed with a publicity-conscious government confident of the largest parliamentary majority in the history of the state and anxious to effect a sea-change in Ireland's traditional image as an impoverished, if pleasantly easy-going, rural backwater. As a result, a rash of articles began to appear in the world's press containing a similar message to that printed under the Guardian's embarrassingly patronising headline: 'The Little People Who Found The Crock Of Gold'.
Unfortunately for the Fianna Fail administration of Jack Lynch, the transformation was unexpectedly short-lived, and many of the same correspondents are now returning to report the attempts at survival of an economy under siege from a host of economic difficulties including a catastrophic four-month post and telephone strike, a crippling energy shortage and the damaging effects of breaking the 153-year old link with sterling. To add to the cabinet's obvious discomfort (clearly illustrated by the recent series of peevish ministerial attacks against the Irish news media), the unhappy state of the country is due to come under renewed international scrutiny from 1 July when it begins a six-month spell as chairman of the EEC'S Council of Ministers.
Post mortems on the fate of the muchheralded Irish economic boom have now become the order of the day as tourism, business confidence and future prospects all suffer under the handicaps imposed by a stifling absence of communications and an inflation rate already touching 15 per cent. Whether they are conducted in the staid leader columns of the Irish Times, the hysterical outpourings of Republican News or in a city hostelry, the tone is invariably angry and the blame put on the incompetence of certain government ministers.
With some agile footwork worthy of his days on the gaelic football field, the Prime Minister has so far managed to sidestep much of the mounting criticism. But the sureness of political touch which Mr Lynch demonstrated so convincingly during the triumphant 1977 election campaign has gone, and with his 62nd birthday due in August, speculation is rife about his successor. Signs that the favourite will be Charles Haughey, the man acquitted during the controversial 1971 arms trial, have not pleased a British government which is already braced for a barrage of nationalistic propaganda from Fianna Fail spokesmen anxious to persuade Mrs Thatcher to modify the constitutional guarantees to the Protestant majority in Ulster.
Perhaps the most psychologically damaging of the Irish Republic's recent economic afflictions has been the sad fate of the national currency since the link with the EMS necessitated a complete break with sterling. Hardly a week has passed since without news either of a decline in the value against other world currencies or some new practical humiliation, such as the refusal of the House of Commons to accept Irish cheques or the sudden ban imposed in the Isle of Man on the normal free circulation of Irish money. There is now a surreptitious campaign to try and persuade the international financial community to refer to the new currency as 'the Irish pound' rather than the original term, 'the punt'. On a day when its value had dropped to 95p against sterling, a leading Irish banker explained rather sheepishly: 'I think that the repeated jibes about sinking and leaking punts were just getting too much for the government to bear.'
As well as pricking the easily wounded Irish pride, the unaccustomed vulnerability of the national currency has added severe managerial problems for ministers, officials and Irish central bankers little practised in the skills of coping with the vagaries of international monetary speculation. To make matters worse, there is general agreement among diplomatic observers in Dublin and Belfast that the break with sterling has institutionalised the meandering, 300-mile Irish border to an extent not witnessed since its creation. What until 30 March was a dividing line with few of the trappings of an international frontier has now become a barrier fortified by all the cumbersome procedures of foreign exchange.
The problems of the punt (a gaelic name which it will take more than government persuasion to eliminate) are mainly attributable to reasons habitually associated with weak currencies; a high rate of inflation, an adverse balance of payments and an excessive level of government borrowing. It is now apparent that the Irish government seriously underestimated the future strength of sterling when it made a decision on the EMS, heavily influenced by an understandable desire to break the last major tie with Britain. More excusable is the fact that its resident economic guru, Dr Martin O'Donoghue, a politically inexperienced former Trinity College professor, also underestimated the severity of the country's energy problems and the damage which would be inflicted by strikes in the public sector.
To the outsider, particularly the ever suspicious northern Protestant, it is the inept handling of the postal dispute which has raised the biggest question-mark over the real abilities of Fianna Fail (literally translated 'The Soldiers of Destiny') to manage an increasingly sophisticated economy. All but those on the limited number of working direct dial telephones have been completely cut off since the strike began; foreign businessmen are unable to contact their head offices; thousands of bills are unsettled and despair has been caused in many sections of Irish industry — particularly tourism. To add to the general chaos, which has already led one Dublin paper to comment ruefully that the country has become a place where the worst Irish jokes now come true, the petrol famine shows little sign of abating. The recent price rise of lip a gallon, queues which start forming before dawn and little evidence of any firrn grip on the situation — all are expected to cost Fianna Fail dearly in this week's European and local government elections. The alarming increase in strikes (469,000 man-days lost in the first quarter of this year compared with 588,000 in the whole of last) has led to much ministerial talk about the dangers of importing what is scathinglY described as 'The British Disease'. These warnings against increasing trade union militancy were vainly repeated last month after the crushing rejection of the government's plans to introduce a so-called 'national understanding', which would have restricted wage increases to 15 per cent in the next round, a target already criticised .as dangerously inflationary by many financial experts. Earlier in the year, a bungled attempt to reform the country's antiquated taxation system brought 150,000 PAYE workers onto the streets in one of the largest protest demonstrations ever seen in Dublin. Unlike its European partners, the Irish government risks more than domestic displeasure as the result of current difficulties. At the peak of last year's boom, when a bright economic future seemed assured, Fianna Fail waxed lyrical about the pros' pect of achieving gradual but significant progress towards the elusive goal of Irish unity by tempting northern Unionists with the carrot of its new-found prosperity.. It was repeatedly argued that the opportunItY of sharing in such obvious material wet!" being would somehow persuade Ulster.s one million Protestants to forget inconvetw ences like the ban on divorce in the Republic, the country's strict censorshIP laws and its absurdly restrictive regulations on the availability of contraceptives. In the face of the new economic realities; such arguments are beginning to soun° increasingly hollow. With them are disar pearing the chances of yet another potell] tially peaceful, if hopelessly optimistic an' unlikely solution to the seemingly intraetable Irish problem.
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