Monday, March 21, 2005

Swiss cuckoo?

Damien Kiberd attacks Swiss central banker, Ulrich Kohli, who has criticized Ireland's economic success:

Ireland’s reliance on multinational capitalism is seen by our Swiss friend as a weakness. But is this really the case? We have no say in the final decisions that determine whether a foreign-owned plant will continue in existence or not, but the experience so far suggests that multinational companies are here for the long haul. Companies such as Intel, Boston Scientific, Abbott Laboratories and others now have deep roots in the community.

We have had defections by multinationals in the past (remember when Digital quit Galway?) but they have been well flagged and in general the local communities affected have taken them in their stride and gone on to achieve greater things.

In a global economy in which the rate of change is constantly accelerating, it is inevitable that there will be some loss of jobs in overseas-owned industry each year. Arguably, Ireland has rolled with the punches and adapted to necessary change.

Ways in which Ireland and Switzerland are similar:

In some ways, Ireland is similar to Switzerland in that it has a small number of world-beating companies, such as Kerry plc (food ingredients), Ryanair (airlines), CRH (building materials) and, of course, the bloodstock sector, which will continue to prosper, provided that envy and jealousy both here and in Europe do not overwhelm it.

Ireland has also developed a huge niche in financial services: the untold story of the Celtic tiger is the so-called brass-plate operations at the International Financial Services Centre (IFSC) in central Dublin that have indirectly provided highly paid employment for a vast array of accountants, tax planners and corporate lawyers across the city, in turn giving those people the appetite and capacity to put together huge M&A deals and property ventures.

The fact that Ireland now ranks among the biggest cross-border property investors in the world is due in no small measure to the foresight shown by those who created the IFSC in the late 1980s.

Kohli might not like to admit it, but in this, Ireland is similar to Switzerland, with its historically large and secretive banking sector. The Swiss do not go in for disclosure.

I have visited the equivalent of the Irish Bankers’ Federation in Switzerland, the so-called representative body for Swiss banks that deals with unpalatable queries. It is a very small back office with a handful of staff that affects to know little or nothing about the manner in which banking is conducted in Switzerland.

If anything, Ireland is far more open about the sort of operations that exist here than the Swiss are about their banking sector.

The key driver of the Celtic tiger economy is the services sector. We have in the period since 1990 developed service-sector employment from 500,000 jobs to about 1.35m. Anybody who wants to attack the Irish economic miracle, even disgruntled Swiss bankers, should perhaps focus in on this issue.

Maybe the Swiss would be better off trying to fix what is wrong with their own economy rather than waste time criticizing the success of the Irish one.


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