Gombeen man is back to sink his nails into Ireland's woes

The money-hungry Gombeen man returns to Ireland during its debt crisis, armed with a full panoply of weapons from the IMF and the EU.

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Here is a short lesson in Irish history: one of the most hated figures in the country's often troubled past was the "gombeen man", a character forever associated with the 19th century Irish Famine in which a million people died and another million were forced to leave the country.

The gombeen was the money-grabbing middle-man who profited from the people's desperation for food by charging exorbitant rates for meagre but life-saving produce.

He was usually Irish but, in the popular imagination at least, he always worked for the British landlords who owned the country back then.

This is what the nationalist poet Joseph Campbell said of him:

"Behind a web of bottles, bales,

Tobacco, sugar, coffin nails

The gombeen like a spider sits,

Surfeited; and, for all his wits,

As meagre as the tally-board

On which his usuries are scored."

It was thought he had been thrown out of the country along with the British in 1921 but I've got news for you: the gombeen man is back, armed with a full panoply of weapons from the IMF and the EU. The tally-board this time will be drawn up in Washington, Brussels and Frankfurt.

If Ireland is forced to go to these international financial institutions for a life-saving bail-out, as now looks inevitable, the gombeen will be in Dublin taking an axe to those aspects of Irish life - education, health care, public services, law and order, low-taxes - that made the Republic one of the most attractive places in the world to live.

Call this, if you like, an embittered reaction from an Irish citizen, despondent at seeing the country's hard-won economic independence and prosperity surrendered for a few billion euros.

But enthusiasts for a single currency in the GCC area - the UAE of course is no longer among them - would do well to study the events unfolding in Dublin. Whatever happens with poor old Ireland, there are lessons to be learned about how, when and even why countries should enter a currency union.

Because it is the euro that has reduced Ireland to its current dire straits - the euro, and the gombeen men, Irish, American or European, who will now hammer in the coffin nails.

The Irish themselves must bear a lot of the blame. How could a poor, underpopulated, agriculture-based society on the extreme limits of Europe suddenly become home to a thriving property market rivalling London, New York and Paris? It should have made somebody sit up and think when apartments in Ballsbridge, Dublin, were changing hands for more than the equivalent in Manhattan or Mayfair.

The statistic that brought it home to me was this: in 2005, the part of the world that had the highest per capita ownership of private swimming pools was not Malibu, California, or Boca Raton, Florida, nor even Dubai, UAE, but County Donegal, Ireland.

These were not owned by farmers who suddenly decided they might have need of a refreshing dip after they finished cutting the hay, traditionally the principal economic activity in the beautiful but impoverished region.

They were owned by investment bankers, stockbrokers and property investors from the great megalopolis of Dublin who, having made their millions there, wanted to get back to their Irish roots in the rural homelands. A swimming pool was just part of the package, even if totally inappropriate for the climate of north-west Ireland.

So indigenous greed was part of it; the gombeen man was usually Irish. But it was the euro and Ireland's enthusiastic membership of the EU that created the conditions for greed to grow.

Ireland had stoked its own property boom by a combination of generous tax incentives for businesses and entrepreneurs, especially the "creatives", which sucked in investment in the 1990s. The launch of the euro in Ireland in 2002, replacing the Irish pound, or punt, and the low interest rate regime Germany insisted on, really set the Irish property market alight.

Freed up from foreign exchange constraints and seeking the highest return, euros flooded into Ireland to inflate the property market. By the time the Irish realised what was happening, at the very beginning of the financial crisis, it was already too late.

Without the power to adjust interest rates or introduce currency controls, they were helpless to prevent the collapse. The one big, radical measure they took - when the government guaranteed all bank deposits - has exploded in their faces now that all Irish banks are more or less toxic institutions.

The fate of other small economies on the periphery of Europe, such as Greece and Portugal, simply reinforces the message: a one-for-all currency regime in a region with more than 300 million people all at different stages of economic development is simply not practical. The architects of the euro zone were peddling a fantasy when they suggested it was a desirable arrangement.

The Greek, Irish and (looming) Portuguese crises might prove to be the coffin-nail for the euro zone but somehow I doubt it. The gombeen men of the EU and IMF have got their power web in place and I doubt they'll want to relax their grip now.