This Is the House That Ireland Built

There is nothing ordinary about this property,” runs the broker’s pitch for a substantial detached family home on the Silver Birches estate, a cracked tile’s throw from the market town of Longford in the Irish Midlands. A tour of John Killane’s house, one of only a small number of occupied dwellings in the development, suggests there is indeed nothing ordinary about the houses there. “Why don’t you take a little walk across that floor?” Killane suggests, hovering at the threshold of his spacious dining room. His caution becomes understandable as each step triggers a violent swaying motion. The builders failed to divert a stream that continues to run its course beneath the floorboards.

Upstairs, the walls are sodden too; a Manchester United banner in his sons’ bedroom threatens to turn Chelsea blue with mold. He’s moved the kids into another room because their asthma is worsening. The original prospectus that helped persuade Killane to part with 260,000 euros for his new home three years ago — about $347,000 — promised a day-care center, tennis courts and smooth, green lawns where residents’ children might safely play. If Killane risks allowing his boys outside to kick a ball, they do so on a mulch of mud and raw sewage that bubbles up from unfinished pipes leading to an open septic tank. Left to their own devices, the children of Silver Birches and Ireland’s more than 600 other failed speculative developments known as ghost estates often run greater risks: climbing through broken windows into the ranks of empty houses — most never lived in, many never completed, built with tax incentives and cheap loans from financial institutions as rocky as Killane’s floors — to play amid the debris and broken glass of the Irish dream.

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Ghost estates aren’t just symbolic of Ireland’s fall from grace. They are one of its key causes, the most conspicuous legacy of the unhinged building boom and incontinent bank lending spree that have driven a once affluent nation into staggering debt. With its budget deficit totaling 32% of GDP, the highest by far in Europe, Ireland has metamorphosed from proud Celtic Tiger into mangy rescue cat. Even as officials from the European Central Bank, the European Union and the International Monetary Fund moved into the Irish Finance Ministry, the government continued to protest that the country could sort out its own mess. The cave-in came on Nov. 21 with a formal application for an 85 billion euro ($110 billion) bailout. The promise of the cash — and a four-year plan to slash a further 15 billion euros ($19.5 billion) in government spending — did little to soothe the markets, leaving Ireland’s would-be rescuers scratching their heads. What more could be done? Yet the real puzzle about the crisis, which has wrought misery at home and triggered such turbulence in international financial markets as to risk toppling European countries like Portugal and even Spain into insolvency, is not why Ireland took so long to admit it needed help. It is why it blithely passed so many red danger signals on the way to the precipice.

Choppers in Galway
To understand the problems that engulf Ireland, we must do the one thing many Irish didn’t do during the boom years: pause and take stock. Ireland’s youth have never known anything but good times; their parents were eager to forget the humiliations and hardships of the past. As the economic miracle of the 1990s finally granted the Irish the power not only to reduce the influence of their former British overlords but even sometimes to lord it over them, Ireland’s euphoria metastasized into madness.

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Form your assessment of the Irish economy in the center of Dublin and you’d scarcely realize anything was wrong. The outer signs of wealth are still there, and if beggars crouch on the sidewalks, that’s nothing new. The rising tide of affluence never floated all boats, but it did turn bricklayers into property magnates, small entrepreneurs into tycoons. The author John Banville recalls a “Joe Kennedy moment,” an instant when, like the Kennedy patriarch who predicted the 1929 Wall Street crash after a shoe-shine boy offered him stock tips, he looked beyond the show of prosperity to the yawning abyss. “Last spring, when we were already deep in recession, I spotted driving past in the street here in Dublin a gleaming 2007 Bentley with a yellow taxi sign on the roof,” he says. “It seemed almost ludicrously symbolic, but there it was.” Eamon Gilmore, the leader of Ireland’s opposition Labour Party, dates his realization of how badly awry things had gone to a trip to the Galway Races four or five years ago. “What fascinated me was the helicopters, all these helicopters. There was a whole helicopter culture,” he says.

From tractors to helicopters, Ireland traveled a long way in just a few decades, diversifying from agriculture and low-cost manufacturing into high-tech enterprises and attracting foreign companies by offering low corporate tax rates and a highly skilled English-speaking workforce. Unemployment and an outflow of Irish talent declined in lockstep, and the economy notched an annual average growth rate of 6.5% from 1990 to 2007. By the eve of the 2008 banking crisis, Ireland’s population of 4.25 million boasted more than 30,000 euro millionaires and 300 with fortunes estimated at more than 30 million euros ($39 million). One of the biggest players was Derek Quinlan, part of a consortium that in 2004 bought a clutch of London’s most famous hotels, including Claridge’s and the Connaught — which shares a name with Ireland’s poorest province. One of his Irish employees promptly hoisted the Irish tricolor above the hotel. “I cried,” said Quinlan. “My poor father, who was in the Irish army, would have loved to have seen this.”

Read: “After Ireland: Who Will Be Next to Need a Bailout?”

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Critics of Europe’s monetary union blame Ireland’s surrender of control over interest rates for the bubble economy that burst — and has left Quinlan struggling to snatch his personal holdings from the maw of Ireland’s National Asset Management Agency, set up earlier this year to take bad property loans worth 80 billion euros ($104.2 billion) off the books of the country’s ailing banks. But Europe has been good to the Irish, reducing their dependence on British markets and granting access to cheap capital that, for a while at least, was well used.

If only Ireland had known when to stop. Everywhere are reminders of the national lunacy: empty office blocks, derelict warehouses, echoing hotels. At the peak of the property boom, Longford, 75 miles (120 km) northeast of Dublin, attracted commuters whose wages couldn’t stretch to a property nearer the Irish capital. Its town center is dominated by a gleaming 215,000-sq.-ft. (20,000 sq m) mall, built without an anchor tenant and adorned for the past two years with OPENING SOON signs. The only big-ticket items for sale on the nearby high street are the leases of boarded-up shops.

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Though the shoddy construction of some ghost estates might suggest otherwise, the housing surplus wasn’t created overnight. In April 2006, a national census found 23% of homes in County Longford unoccupied. In the 12 years up to that point, house prices in Ireland had rocketed by 520%. “How alarm bells were not rung, I do not know,” says Seamus Butler, a local businessman. “But they just kept on building.”

In fact, alarm bells were ringing, loudly, but they were ignored. In July 2007, Ireland’s then Taoiseach, or Premier, Bertie Ahern, vented his spleen at the rising chorus of skeptics questioning the sustainability of Ireland’s economic expansion. “Sitting on the sidelines cribbing and moaning is a lost opportunity,” he told the Irish Congress of Trade Unions. “I don’t know how people who engage in that don’t commit suicide.”

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He later apologized, but only for any offense he might have caused to the families of suicide victims. Now rage against Ahern and his hapless successor, Brian Cowen, burns bright, as it does against bankers and property magnates. Most of all, though, the Irish are angry at themselves. “You know what’s the hardest to accept? We allowed this to happen,” says Josephine Donohue, the principal of Mercy Secondary School in Ballymahon, south of Longford. “We got used to a better standard of living, the foreign holidays, the weekends away, eating out. Our lifestyle changed. It became very materialistic.”

Living Well, the Best Revenge
Anyone who knew Ireland before its party years — a drab, conservative place that seemed permanently preserved in the aspic of isolation and insularity — will cut its citizens some slack for getting carried away in the excitement of its transformation. The politicians who might have been expected to curb the excess were themselves caught up in it. And there was another factor distorting their judgment. Living well, they say, is the best revenge, and the legacy of animus left by the War of Independence against British rule underpins Ireland’s enduring desire to flip the bird at Britain or hoist tricolors over British assets. A latter-day republican spirit fueled the government’s resistance to the bailout. The prospect of its capitulation earned the scorn of the country’s most influential newspaper, the Irish Times. “Having obtained our political independence from Britain to be the masters of our own affairs,” fulminated a Nov. 18 editorial, “we have now surrendered our sovereignty to the European Commission, the European Central Bank, and the International Monetary Fund.”

Read: “After Ireland: Who Will Be Next to Need a Bailout?”

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Irish political life is still riven by factions formed in the civil war that followed partition. The Free State, precursor to the modern Republic of Ireland, was created by the 1921 Anglo-Irish Treaty negotiated by Michael Collins but repudiated by other leading nationalists. The Fianna Fail (Soldiers of Destiny) party, founded in 1926 by anti-treaty leader Eamon de Valera after his break with harder-line republicans Sinn Fein (Ourselves Alone), has been the dominant force in Irish politics since 1932. Fine Gael, whose name means “Tribe of the Irish,” emerged from Collins’ pro-treaty ranks and is these days the country’s second largest party by membership.

Sitting in his bright office in Dublin, Fine Gael’s current leader, Enda Kenny, looks every inch the 21st century politician: telegenic and sharp suited. Yet while discussing Ireland’s way out of the morass, he several times refers to the economy’s prospects for 2016. The date is unrelated to any deadlines set by the international community as part of the bailout deal. It marks, rather, “the centenary of the Easter Rising,” explains Kenny. The failed 1916 rebellion against British rule “was the start of our path to economic independence,” he says. “Fianna Fail would always say they are the true republicans. Here we are almost a century on from the start of that path to economic independence, and they’ve brought us to the edge of an abyss.”

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Elections expected early in the new year could resemble a civil war re-enactment, with Collins’ troops aiming to thrash those of de Valera. Sinn Fein’s Gerry Adams, who was until recently mired in the conflict in Northern Ireland, plans to give up his seats in its Assembly and Britain’s Parliament to contest the constituency of Louth, south of the border. Opinion polls point to a resounding defeat for Fianna Fail and a new coalition between Fine Gael and Labour. Some polls indeed suggest Labour might for the first time in its history emerge with more seats than either of the big parties rooted in the War of Independence. Its leader, Gilmore, a soft-spoken former trade unionist, isn’t the most obvious avatar of hope and change — Ireland’s scarcest commodities — but he tries to temper his sober assessment of the current predicament with what he calls “the missing piece of the narrative,” a positive vision of the future. “We are going to be a growing, thriving economy again. We have to get through this storm. But we are going to get through it,” he says.

Labour faces high hurdles in a culture in which historical ties are decisive. There are signs, though, that the old allegiances may be fracturing. “It’s going to have an impact on my generation,” says Tara Keegan, 26, who is contemplating joining the new Irish diaspora if her freshly minted master’s degree fails to win her a job back home. “It could be a good thing if this crisis gets us [young Irish] more involved in the political side of things.”

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Time to Help Themselves
For the moment, Keegan is staying in Dublin. “I’m giving myself until Christmas here. For me, England is the next step, but people are going to Canada, Australia, everywhere you can get work,” she says. Back in her hometown, Longford, prospects are bleak. Even before the austerity budget, due on Dec. 7, unemployment in the Midlands region had risen from 4% in 2006 to 14.5% this year, above the national average and higher still than in Dublin. With hopes of Ireland’s eventual return to health pinned on high technology and added-value products and services, it’s hard to see where renewal in blighted rural areas may come.

For some, the despair of joblessness and financial hardship is overwhelming. “A friend of mine last week, 38 years of age, his wife walked in, and he’d left a sandwich sitting on the table,” says Killane. “His 15-year-old son went out to check and found him hanging in the shed.” Out of work himself and struggling to pay his monthly 1,200-euro mortgage payment with his 1,540-euro unemployment benefit, Killane retains a fighting spirit. “The likes of the banks are turning around, saying, ‘Don’t feed your children. Don’t clothe your children. Don’t send them to school. Just pay us,'” he says. “Everyone living on these ghost estates should get together and say, ‘We’re not going to pay any mortgage. We’ve had enough.’ They say, ‘We can’t help you.’ We should say, ‘We’ll help ourselves.'”

Amid political turmoil and economic wreckage, loaded with debt and bereft of opportunities, many of Killane’s compatriots are reaching similar conclusions. So there’s a glimmering as a dark Christmas approaches. Foreign nations and international institutions may be ready to shore up Ireland, but the Irish know very well that the key to recovery lies in their ability to help themselves.

This article originally appeared in the December 13, 2010 issue of TIME Europe.

Read: “After Ireland: Who Will Be Next to Need a Bailout?”

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