Ship of Fools (21 page)

The sheer scale of this rush to buy buildings in foreign climes is remarkable. In 2007, the second biggest slice (after the UK) of money invested in the entire European property market was Irish. The Irish spent nearly €14 billion that year. The French spent €11 billion and the Dutch €8 billion.

When the property crash came, Irish people were rather surprised to learn that of the €90 billion in development loans that were dragging down the Irish banking system, €25 billion related to property in the UK and €3 billion in the US. (An unknown, but probably very substantial, amount was related to continental Europe - €2.6 billion was invested from Ireland in France and Germany in 2007 alone.)

In truth, this outflow of money (which came from moguls buying office blocks, barristers buying villas in Portugal or Florida and middle-class investors buying apartments in Bulgaria) combined two primeval instincts: put money into property and get it out of the country. While the ideological justification for the government's cosseting of the rich was that their money would trickle downwards into the Irish
economy, much of it actually flooded out of Ireland. The total stock of foreign portfolio asset securities held by Irish residents at the end of 2007 amounted to €1,338 billion - that's €1.3 trillion, about the same as the projected US budget deficit at the end of 2009. While much was always made (rightly) of US investment in Ireland, it was easily forgotten that there was also a powerful flow in the other direction. Little Ireland is now the tenth largest investor in the United States - not in relative but in absolute terms. In 2004, for the first time, outflows of foreign direct investment
from
Ireland exceeded inflows
into
Ireland. The number of Americans employed by Irish companies in the US is about 75 per cent of the number of Irish people employed in Ireland by US companies.

The reluctance to invest in innovative Irish companies, the complete failure to get within a sniff of the world-class broadband infrastructure that was supposed to be a national priority, and the failure to create through the education system an organic technological culture were huge cracks in the facade of high-tech Ireland. They were indirect but deeply damaging effects of the cronyism, lack of ambition and idolatry of raw money that dominated the political system. While money, energy, ingenuity and political support were stoking the property boom, Ireland's response to the technological forces that had helped to create the Celtic Tiger were increasingly less reminiscent of Silicon Valley and more of
The IT Crowd
.

‘Those who have shaped our modern, thriving nation can
escape as a little reward once in a while, without ever losing touch
with home'

- brochure for the Island of Ireland

 

 

 

‘The “Island of Ireland” is strategically located at the centre of “The World”.' As a statement of the self-absorption and grandiose delusions of Celtic Tiger Ireland, this one would take some beating. But it is intended literally. The ‘Island of Ireland' is not the island of Ireland. ‘The World' is not the world. The island is part of a man-made archipelago off the coast of Dubai, 300 artificial platforms in the Arabian Gulf, surrounded by an oval breakwater shaped to form the map of the world.

On the 225,000-square-foot Island of Ireland, owned by a consortium led by the Galway-based property developer John O'Dolan, the plan was to have just a hint of ‘the architecture of Ireland through the ages'. In case potential investors might be put off by the thought of damp thatched cottages festering in the rain or dreary bungalows on windswept hills, the promotional brochure stressed that this would mostly consist of a ‘landscaped courtyard area, evoking the wide Georgian squares of Dublin'. For older property developers, there would presumably be a warm glow of nostalgia for the Georgian squares that they and their mentors had done their best to obliterate in the 1960s and 1970s.

The plan, aptly enough, was endorsed on the scheme's website by the serving Taoiseach Bertie Ahern who evoked
‘substantial Irish achievement across a wide range of human endeavours' and expressed the hope that the ‘Island of Ireland' would be ‘seen as symbolic of the best of those achievements and reflect the confidence and vision of Irish people in the new millennium'. These achievements, the brochure made clear, were those of the millionaires who had made Ireland what it was and who now deserved a literal place in the sun: ‘We had a vision . . . to bring a little piece of Ireland to the sun. To create a luxury hotel resort to which those who have shaped our modern, thriving nation can escape as a little reward once in a while, without ever losing touch with home.'

The pitch was perfectly tuned. The great men who ‘shaped our modern, thriving nation' could have their Irish pride in villas with ‘more than just a hint of Irishness to them', but they would not actually have to be in Ireland - a particular advantage for those among them who were tax fugitives. This would be the perfect Ireland, with a vague sense of ‘history' in its mock-Georgian squares but no politics, with a simulacrum of Irish conviviality (‘bars that will remind you of home') without the bother of an unruly plebeian populace (this is ‘the most exclusive real-estate development on the planet'). It would also be the perfect form of globalisation - a world with Ireland at its centre, like Jerusalem in medieval maps. The multi-millionaire's solipsism and self-regard would mesh seamlessly with the fantasy of a Hibernocentric universe: ‘The World can actually revolve around you!'

The Island of Ireland in Dubai was the incarnation of a fantasy that had hovered around the collective imagination of Ireland's elite for a long time. In the late 1980s and early 1990s, Irish intellectuals revived the idea of the Fifth Province (Mary Robinson evoked it in her inaugural speech
as president in 1990). They meant a place of art, ideas and ideals. But the real fifth province of the Irish imagination was a sunny Ireland, washed by a bluer, warmer ocean, where there were no taxes, no history and no social obligations.

In Charles Haughey's era this fifth province was Grand Cayman island, where money frolicked under palm trees, free from the predations of the taxman and the prying eyes of those who wondered about its origins. In Bertie Ahern's era, it was Bermuda, whose tax-haven status Ireland hoped to emulate. It was not for nothing that while English critics referred to the Irish Financial Services Centre in Dublin as ‘Liechtenstein on the Liffey', the Industrial Development Authority preferred, as we have seen, to aspire to be ‘the Bermuda of Europe'. The Island of Ireland in Dubai brought these two notions together - a sunny island that was far away but still, somehow, ‘home'.

Even when this fantasy had to be actually brought home to the process of making money from property development in dark, rainy Ireland, it retained its grip. In the Celtic Tiger era of property development, Ireland was always subtropical. As the property editor of the
Irish Times,
Orna Mulcahy, noted of one of the iconic (doubly iconic in being unbuilt) developments of the boom years, Seán Dunne's would-be ‘new Knightsbridge' in Ballsbridge:

In other countries, global warming is a threat. In Ireland it is a fantasy. The sun-drenched country of the developers' plans actually became the place in which much of the population took up mental residence. During the boom years, people under forty stopped wearing overcoats, even in the dismal winter. The Atlantic wind that stabbed through a flimsy jacket and T-shirt or turned the bare legs of short-skirted girls blue was really a gentle zephyr. Cafes and restaurants began to colonise the footpaths outside their doors for the alfresco dining appropriate to the rain-free, sunlit climate.

There was, moreover, a physical extrusion of Ireland to the world's sunspots as Irish people invested enormous sums in property abroad. Of the €50-plus billion of Irish money spent on buying foreign property, much of the large-scale commercial investment was in the UK or the US. But a substantial amount was spent on acquiring either second homes or investment properties in the Mediterranean, the Adriatic or
even further afield. No location was too exotic, especially if it was an island and sunny. At the height of the boom a not untypical report in the property pages of the
Irish Times
stated that ‘Cape Verde Development, a company started by Tom Sheehy, a Clonakilty-based property fit-out specialist and backed mainly by Cork and Limerick business people, sold 200 units of its 449-unit scheme off plans when it launched a few weeks ago, most of them to Irish buyers'. It is questionable whether most of those buyers had never even heard of the Cape Verde islands five years previously.

Foreign property replaced emigration as the source of the Elsewheres that had long been part of the Irish imagination. The little Irelands of Brixton or Boston were now the little islands in the sun.

This imaginative displacement was part of the larger confusion of space that came with Ireland's experience of extreme and rapid globalisation. The question of whether Ireland was a balmy subtropical paradise or a wet, wind-lashed rock on the eastern Atlantic was a subset of a larger question - what continent was Ireland in anyway? That in turn was part of a wider problem - the uncertainties of both space and time that made it hard for Irish people to be quite sure where they were living, and when.

The question of which continent Ireland belonged in was famously posed by Mary Harney when she told the American Bar Association in 2000 that ‘History and geography have placed Ireland in a very special position between America and Europe . . . Geographically we are closer to Berlin than Boston. Spiritually we are probably a lot closer to Boston than Berlin.' This idea of Ireland as a liminal space, between one continent and another, its proximity to continental Europe a mere factual detail, was of course highly
political. It was intended to identify Ireland as an outpost of American values at the physical and political margin of European ideas. Ireland was really a part of the ‘Anglo-Saxon' economy, sharing the thirst of the US and the UK for frantic consumption, property bubbles, free-range banking and the elevation of the private sector above all public purposes.

Harney, to her credit, was quite explicit about this. In that speech, she defined ‘the European way as being built on a strong concern for social harmony and social inclusion, with governments being prepared to intervene strongly through the tax and regulatory systems to achieve their desired outcomes'. She contrasted this with the ‘American way . . . built on the rugged individualism of the original frontiersmen, an economic model that is heavily based on enterprise and incentive, on individual effort and with limited government intervention'. Ireland, she said, ‘sailed closer to the American shore than the European one'. In this tectonic shifting of continental plates, Harney was assuring her audience that Celtic Tiger Ireland was not much interested in ‘social harmony and social inclusion' or in governments that use taxation and regulation to limit the inequalities and instabilities of the market. It was interested in those mythically rugged values of the American frontier. This was perhaps just as well, since, in line with Harney's ambitions, Ireland would indeed go on to develop quite a line in cowboy economics and earn the title of the ‘Wild West of European finance'.

Yet Harney's figurative shifting of Ireland a few thousand miles to the west was not seen to be absurd. This was partly because of the close historical ties between Ireland and the US and the large scale of American investment in Ireland. But it was also because the Irish sense of belonging in Europe turned out to be much weaker than it had seemed. The EU
had been a crucial part of Irish identity between the 1970s and 1990s when it had been the form in which Irish modernity sold itself to a rural and conservative population. It has, paradoxically, vindicated Irish nationalism by finally breaking the dependence of the Irish economy on trade with Britain. It was not surprising that enthusiasm for the European project was particularly high in Ireland.

Yet, as it turned out, it was also particularly shallow. Linguistically, for example, Ireland remained a relentlessly monoglot subset of the English-speaking world. For all the talk of globalisation and cultural complexity, the Irish were stubbornly attached to English as their sole means of communication. In fact the Irish were more loyal to English than the English: 66 per cent of the Irish population speaks only English, compared to 62 per cent of Brits. By contrast, just a third of Germans speak only German.

On the political level, there was an obvious contradiction between the message coming from government that the Irish were more American than European on the one side and, on the other, the message from that same government that the Irish should vote for treaties enhancing and expanding the EU. The Nice Treaty was defeated in a referendum in 2001. Though it was subsequently passed in a re-run in 2002, the defeat prefigured the initial rejection of the Lisbon Treaty by Irish voters in 2008. The underlying scepticism about where Ireland belonged, largely created by the government itself, could not be turned on and off at will. The Celtic Tiger's tendency to snap at the European hand that had fed it in its infancy was encouraged by the same politicians who, when it suited them, insisted that the Irish should be good Europeans.