PART IV POLITICAL ENVIRONMENT Ireland's Bilateral Relationship with the United States. Ireland and the United States enjoy uniformly good bilateral relations. The same language, similar values, frequent visits back and forth and the presence of some 44 million Americans of at least partial Irish descent guarantee that they will continue to do so indefinitely. There are no outstanding bilateral disputes. A few minor disagreements on specific trade issues, e.g., corn-gluten feed and malt-sprout pellets, occurred in the recent past but have been resolved. That is not to say that others could not arise, given Ireland's membership of the European Union (EU) and its support of the EU consensus on most issues, but, if they do, approval of the Uruguay Round of the GATT negotiations and the reservoir of good will built up on both sides should temper them. Ireland, which has traditionally followed a policy of neutrality, has pledged to support the Common Foreign and Security Policy (CFSP) provided for under the Maastricht Treaty on European Union. This commitment implies an eventual change in Irish neutrality. In any case, the end of the Cold War and the collapse of communism render the concept of neutrality largely nugatory. Ireland has on occasion been critical of some aspects of U.S. Foreign Policy, e.g., Central America in the 1980s and support for Israel, but recent world developments and the accession to power of the new coalition government in January, 1993, have practically eliminated such negative rhetoric. If anything, the Irish want the U.S. to play an even greater role in the resolution of critical international problems. Although not, technically speaking, an ally, Ireland remains one of the U.S.' oldest and closest friends. Perhaps not coincidentally, President Clinton has met more often with Prime Minister Reynolds than with any other head of government. All indications are that the two countries will continue to have extremely good relations. Major Political Issues Affecting the Business Climate: Few major political issues significantly affect the business climate. The Irish economy is "on a roll," performing better than any other in Europe. The outlook is for continued strong growth of better than 4 percent a year, low inflation and interest rates, declining unemployment and, thanks in part to European Union assistance, massive renovation and extension of the country's transportation and communications infrastructures. If the government continues the appropriate policies, the country will keep making steady progress in paying off the national debt. Furthermore, the present coalition government is steady, showing every sign of remaining in office and fulfilling its entire five-year term. One of the few major political issues affecting the business climate is privatization. The "Programme for Partnership Government," the outline of government policy which both coalition parties are committed to implement, provides for continued state ownership of a significant part of the Irish economy. However, joint ventures or other strategic alliances are sought after in the expansion of the telecommunications and electrical power genrating areas. Many state-owned companies are money-losers which help keep taxes high and profits down. Another such issue is taxation. Ireland's relatively high taxes help keep consumer confidence and spending down. The government has failed to indicate that it is considering lowering taxes in response to improvement in the economy. However, foreign companies enjoy significant tax breaks. Given Ireland's extensive social welfare system, employers often find the marginal cost of employing another worker excessively high. Strikes in the private sector are relatively rare, but unions strenuously oppose proposals to lay off or dismiss workers. The Irish Political System Ireland is a parliamentary democracy. Its president or head of state is a largely ceremonial figure elected to a 7-year term. According to the Irish Constitution, the president needs advance cabinet approval of speeches and travel. The incumbent is Mary Robinson, elected in November, 1990. The Bicameral Legislature is comprised of the "Seanad" or Senate with 60 members and the "Dail" or House of Representatives with 166 members. The 166 Dail representatives are elected by universal suffrage for a maximum of a 5-year term. Members of the Senate also hold office for a similar 5-year term, however, 11 Senate members are nominated by the Prime Minister and the remaining 49 are elected by local universities and from panels of candidates in the following five areas; Cultural and Educational, Agricultural, Labor, Industrial and Commercial, and Administrative. The Dail is the more powerful. The electoral system features proportional representation in multi-candidate constituencies. The last election was in November, 1992; the present government assumed office on January 12, 1993. The next election must be held before January 12, 1998. The present line-up among parties in the Dail is: Fianna Fail 66 seats Labor 33 seats Fine Gael 46 seats Progressive Democrats 9 seats Democratic Left 5 seats Greens 1 seat Independents 6 seats The major parties' orientation is as follows: Fianna Fail ("Soldiers of Destiny") -- Founded by Eamon de Valera, it is the successor to the Anti-free State Treaty rump of the old Sinn Fein. It has been the largest party in the Dail since 1932 and has participated in government in 48 of the 62 years since. Until 1989, it had refused to enter into coalition government with another party. Drawing support from all sectors of Irish society, it is populist in policy. Its leader is Prime Minister Albert Reynolds. Labor -- It is the oldest Irish party, going back to 1912 or the pre- independence era. From its previous all-time high of 17 percent in 1969, it dropped to 7 percent in 1987 and to 9.5 percent in 1989 before staging a comeback in 1992. Most observers attribute it to the charisma and opposition record of present party leader/Deputy Prime Minister/Foreign Minister Dick Spring. Labor is social democratic in policy. Fine Gael ("Tribes of Ireland") -- The second largest party, it is the successor to the Pro-free State Treaty Party which formed the first Irish government in 1923. It headed all post-1932 non-Fianna Fail governments until 1993. Traditionally more conservative than Fianna Fail, it assumed a more social democratic orientation under Garret FitzGerald, Prime Minister in 1981-1982 and in 1982-1987. Since 1987, it has dropped in the polls, currently experiencing its lowest-ever ratings, circa 22-24 percent. Fine Gael is basically conservative in policy, but has liberal and social democratic wings. Its leader is John Bruton. Progressive Democrats -- Formed in 1986 by dissident Fianna Fail deputies under the leadership of Dessie O'Malley owing to their dissatisfaction with the party's direction under former Prime Minister Charles Haughey, the PDs won seats from Fine Gael in 1987 by appealing to middle class concerns about high taxes and inflation. Their approach eroded the Irish consensus in favor of the welfare state and elevated the issue of control of public expenditures to the top of the political agenda. The PDs entered into coalition government with Fianna Fail in 1989. They won four more seats in 1992 but were not included in the next coalition government. Subsequently, PDs' leader Dessie O'Malley resigned in fall, 1993, and was succeeded by Mary Harney, the first woman to head a major party in Ireland. The PDs are liberal in policy. Democratic Left (DL) -- An offshoot of the Worker's Party, it lost 2 seats in 1992, possibly owing to the disruption caused by the split and allegations that its leader, Proinsias de Rossa, had been excessively close to Moscow in past years. Initially called "New Agenda" under de Rossa, it subsequently adopted the name "Democratic Left." Despite its communist provenance and leftist rhetoric, DL appeals mainly to middle class voters. DL is basically socialist in policy. Workers' Party -- It was formed by radical Marxists who remained in official Sinn Fein after terrorists seceded in 1969-1970 to form Provisional Sinn Fein and the Provisional IRA. The Workers' Party then steadily espoused more moderate policies; this tendency created tension in the party, leading to its split in 1992. Its sole remaining member of parliament following the split failed to win reelection in 1992. The Workers' Party is still Marxist in orientation and radically left in policy. Its leader is Tomas MacGiolla. Green Party -- The Green Party "exploded" in the European Parliament election of June 9, 1994, winning seats in Dublin and in Leinster, respectively. The Greens themselves and most observers attribute their startling performance to their issue-oriented campaign in a policy area, the environment, of growing importance to the Irish electorate. Since public opinion holds, however, that "Europe" is the appropriate venue for the resolution of environmental questions, it remains to be seen whether the Greens will advance domestically as well. The Party is "ecological" in policy.