New blog commenter, Richard Fedigan, has initiated some interesting discussions on recent threads on topics ranging from Ireland’s reputation and influence in Europe to the need for a new industrial strategy. Richard gathers his views in this guest post in the form of a briefing to the new Taoiseach.
In an attempt to simplify and cut through all past and present recriminations and political posturing surrounding what will culminate in the election of a new Irish leader in a matter of weeks, the following is a three-point briefing note for a “Taoiseach from Mars”.
The note is intended to brief a reasonably intelligent alien, familiar only with the concept and reality of being what is known on earth as a CEO, but free from all awareness of cronyism, parish pump politics or the emotional hangovers of Irish history, particularly anything to do with the Civil War or the tragedy of Irish emigration. He/she/it would have a “translator” to explain terms like unemployment, democracy, growth, exports, ECB, IMF MNCs, FDI BRIC, etc. but not in great detail because the Taoiseach, it is understood, would have a team of accountable people to propose and formulate strategy, get it approved appropriately and then communicate and execute it.It is most likely that, in carrying out the above programme, it will be necessary to completely re-organise the existing semi-state landscape, audit your entity’s real capabilities and capacities and that this may imply radically different governance and accountabilty structures for the overall entity.
1.) The entity you have been elected to lead was once, but no longer is, a “going concern”. It has an underlying economy that is healthy in some respects but rotten in others.
It arrived at its current, sorry impasse by creating and tolerating inadequate political and economic structures ( particularly banks), leaders and governance. These had the support of most of the people for quite a long time, but the people, even those who benefitted most, now recognise that past behaviour must be forgotten even if some mechanisms need to be put in place to punish those who behaved criminally.
The entity’s sovereignty has been severely constrained and many policies and strategies that you come up with will have to take account of commitments already made to other entities like the EU, ECB and IMF to whom “you” owe a lot of the people’s money. Many of the people whose money “you” owe to other entities believe, rightly, that they were “conned” into borrowing this money in the first place, were not properly consulted about taking responsibility for paying it back, and would prefer not to pay it back. This is not a realistic option open to you
There is also widespread and justified belief among your people that the banks in the entity you’re about to govern were aided and abetted, for reasons of profit, by banks outside the entity who should have been better regulated and supervised by European institutions which have been shown to be inadequate for this task.
Furthermore, the people believe, rightly, that the political leaders of the main European states that make up the European Union, particularly, the Eurozone, are “punishing” peripheral entities like yours, that admittedly behaved irresponsibly, to protect their own irresponsible banks and the Euro.
In addition, your the people believe, rightly, that some of these European political leaders, for their own electoral benefit and survival, are whipping up xenophobic and protectionist sentiment against the peripheral entities to cover up their own political ineptitude and lack of courage over many years.
Your entity will have to negotiate very hard with these European political leaders, but more importantly, with their bankers, in order to get the European entity to face up to its own resonsibilities while not reneging on yours. This will require you to urgently appoint a very tough and appropriately qualified and experienced negotiation team. Preferably NOW.
2.) The entity you are about to lead used to be a very poor, agriculture-based ex-colony of a neighbouring bigger entity ( Britain) and the people became used to a choice of staying at home to farm or emigrating, sometimes to Britain but also much further away to places like the USA, Canada and Australia where they generally did very well economically and socially but seldom came back permanently. (Some did come back “permanently” in recent years but are now re-emigrating in bitter disappointment. at policies pursued in your entity.)
This all changed over 40 years ago when a fairly good government adopted the suggestions of a (good) public servant called Whitaker (TK) and the entity developed an “industrial” policy.
In simple terms, this policy, (later developed into something of a strategy through semi-state entities like the IDA, Enterprise Ireland, Bord Bia and many others) succeeded in leveraging your entity’s membership of the European Union, and later its Euro currency, to attract mainly US MNCs ( initially computers and electronics and later pharmaceuticals, chemicals, internet technologies and services and financial services) wishing to export to those markets.
This policy was so successful that it transformed the entity’s economy away from dependence on agriculture, diversified the entity’s exports away from the former coloniser’s market to EZ markets and back to the US, created lots of high value employment both in the MNCs and to some extent in companies feeding into these MNCs.
It must be said that the policy was much less successful in lifting the exports of the indigenous sector, particularly the employment-critical food and drinks sector which, by and large has remained dependent on the ex-colony’s market,has not developed international brands and has been less successful in creating high value employment in your entity.
Your peoples’ educational standards and skills were improved enormously ( but not to “world standards) and the entity came to depend almost entirely for growth on these exports.
At the beginning, there were many perceived reasons for these MNCs to invest in the entity, including low costs but, over time, it became clear that the main reason for this investment was the low Corporate Taxation rate ( 0% initially, then 10% and now 12.5%).
The policy was so successful and the entity attracted so much FDI that some of the political leaders mentioned in 1.) above became annoyed about the jobs that could have been created and the taxes generated in their countries by your entity’s MNC exports to their markets.
This led recently to these political leaders raising serious questions about this CT rate, particularly because of their perception that they have loaned your entity a lot of money so that your entity may one day become a “going concern” again.
While it is critical to negotiate hard to retain the low CT rate that attracts these MNCs, particularly since they account for 90% of the entity’s export-driven growth, there are now serious questions about how long these companies will continue to use the entity as a base for exports to the EZ markets which are now becoming relatively less important for the MNCs than the “emerging” BRIC markets.
You should note that, at the time of this briefing note,your entity exports virtually nothing to the fastest growing markets on this planet.
A further concern is the fact that employment in these MNCs appears to have peaked some time ago and that even continued success in this arena will not “mop up” the 450,000 people currently unemployed in your entity.
3.) You should note that the international reputation of your entity, which is so dependent for the growth necessary to paying its heavy debts on export markets, is at possibly an all-time low.
Over the years government departments and some of the many excellent semi-state organisations in your entity have employed promotional slogans ranging from “The Young Europeans” to, “The Smart Economy” to “The Irish Mind” to “The Food Island” to “Where Innovation comes Naturally”.
It has not always been clear to those observing your entity from outside, frequently the target audiences, that these slogans have been reflections of real, substantive policies, much less fully-developed strategies.
You should know that all of these slogans, and more importantly, the lack in many instances of real strategies behind them, are now redundant. They will certainly make no meaningful contribution to alleviating the single biggest challenge facing your entity today, unemployment.
It is certain that, whatever its extent, emigration has and will become an everyday reality for the people of your entity and can be expected to increase appreciably over the coming five to ten years.
You are faced with the choice of ignoring this reality or ( by telling the truth) beginning a process of transforming your people’s often emotional perception of emigration into one that sees it as an opportunity to acquire skills, education, experience and revenue that will be needed in any event by your entity in the coming years as it competes in a truly globalised economy.
This is more easily understood and apprehended by the young, the better educated and those with networks already established in “export” markets. It is likely, however, that even the less young and less well-educated will need to tap, build and develop wider international networks to survive and thrive in the current and future contexts.
1.) Your immediate priority is to recruit, brief, incentivise and clearly “mission” an experienced negotiation team to engage aggressively but in a spirit of clear recognition of your entity’s irresponsibility with both the “monkeys” ( European politicians and heads of institutions) and organ grinders ( European bankers) to renegotiate what is possible to ease the terms of the ECB/EU/IMF deal to which you are already commited
2.) Begin immediately the recruitment and “missioning” of a small Task Force, definitely incorporating experienced international strategists from outside your entity, to study the above agenda and recommend early, concrete, measureable and accountable mechanisms to SOLVE the issues it raises, most notably, the need for a new ” industrial” strategy and a different attitude toward emigration.
Richard Fedigan was born in Dublin and has worked, mostly in the private sector, in the US, Ireland, West Africa and France where he’s been based for almost 30 years while remaining an Irish citizen. He is former President & CEO of CIES-The World Food Business Forum www.ciesnet.com and was made a Chevalier of the French Republic in 2004.