July 18, 2005: Peter Sutherland, Chairman of BP and Goldman Sachs and UN Special Representative on Migration and Development, discusses the state of Ireland with anchor Daljit Dhaliwal.
DALJIT DHALIWAL: Peter Sutherland, welcome to WIDE ANGLE.
PETER SUTHERLAND: Thank you.
DHALIWAL: That was quite a powerful image. We saw the doors closing on that church in Limerick. Did you think that you would ever see that happening in Ireland?
SUTHERLAND: Well, I suppose I didn’t in one sense. I was educated by the Jesuits and I don’t like seeing a Jesuit church closing anywhere. But, having said that, I think that there are a couple of points about it. First of all, there’s been a reduction in the number of people who are going to church. But, also, in that particular case, I would imagine that part of the reason is that a lot of the inner-city population have moved out. The tenements — which were referred to in the context of earlier times in Limerick — no longer exist. And most people are moving to the suburbs.
So, that’s an element in this. And, therefore, the dramatics — while it’s dramatic enough in itself — have to be tempered by a recognition that part of this is the result of prosperity.
DHALIWAL: And, also, there has been a drop in terms of the number of priests that are being ordained as well.
SUTHERLAND: Very significant.
DHALIWAL: What is happening to religion in Ireland?
SUTHERLAND: I think that religion in Ireland, as Father Murray in the previous piece put it, is following a course which has been evident in other parts of the world — everywhere, virtually, in Western Europe. And there is a reduction in the number of people going to church.
Perhaps, it’s related to a more consumerist society. There are a whole lot of reasons why that might be the case. There have also been dramatic events in the recent history of the Church in Ireland which haven’t been positive in terms of its image.
So, all of these, I think, have conspired to bring about a situation where there has been a reduction in churchgoing. But, I think, I’m probably right in saying that we’re number one or two still in Europe in the number of people who go to church on Sundays. So, the figures while say, reduced —
DHALIWAL: Is it still a religious country?
SUTHERLAND: Well, it’s a question of how you define religion. And it’s very difficult to look into people’s hearts and how many people go to church because it’s the norm to do so, and how many of these people do it as a general commitment and so on…
But, I would still say that the Irish people are very committed to religion in one way or another. And, certainly, the effects of religion continue. I think in terms of personal giving, to the Third World, for an example, Ireland is at the very top of the league of what people do and how they associate with the developing world.
And it’s very interesting if you live in this part of the world, that when we see films of Somalia or Sudan or Darfur or wherever else, it’s fairly likely that the person that you see in an NGO, who’s out there working on the ground is Irish — incredibly more, certainly, than the proportion of our population to the total population of Europe or the Western world would suggest. So, I’m not as pessimistic about the heart and soul of the Irish people as some people are.
DHALIWAL: And what went through your mind when you saw that auctioneer extolling the virtues of the Sacred Heart church as a possible condo development or as a restaurant complex or possibly a bar?
SUTHERLAND: Well, he also hoped that — or said that it might be a place of worship. I suppose that that’s unlikely as it’s being closed as a place of worship. Obviously, you can only look at something like that with a profound sense of regret. It seemed to me to be a lovely church, just to look at it. And obviously, one regrets that, but perhaps it’s the inevitable reality of the world in which we live and which you’re describing, accurately.
DHALIWAL: The march of progress, the march of progress in Ireland as well?
SUTHERLAND: Well, progress is one way of putting it. It’s the march of time and the way that events have changed people where they are, their perspectives and so on. It’s a combination of all of those things.
DHALIWAL: And do you think that it is inevitable that at some point, that that was bound to happen in Ireland, but it’s a country that’s now part of the global community and has totally arrived?
SUTHERLAND: I’m not sure, really. I think it’s more complicated than that because the implication of the question is that to be part of the global economy and the global world in which we now we live, people in the Western world have to drop spirituality or relationships with the Church or whatever.
I’m not sure that that necessarily is the case. I think it’s a phenomenon. Whether it’s a temporary phenomenon — simply the result of a certain attitudinal situation led by consumerism perhaps, also by attitudes through the Church, some wrongdoings within the Church in Ireland.
Whether this is something that’s reversible or not, I’m not an expert on this subject. I just don’t know. But I’m not prepared to simply say that it’s an irreversible situation. I don’t know.
DHALIWAL: Let’s talk about Ireland’s boom. Define for us where Ireland is today and how it’s doing in terms of the global economy, its position within that.
SUTHERLAND: Ireland has had a phenomenal period during basically the last 15 years where its growth has been far higher than comparable market economies in the Western OECD (Organisation for Economic Co-operation and Development) group of countries. And this phenomenal change has totally altered the society in which we live in a whole range of different ways.
It’s been promoted by a series of external events which Ireland took advantage of. For one thing, in the early 1990s — 1989 to 1991 in particular — we saw the collapse of the Iron Curtain. So we saw the process of globalization taking a huge step forward. This is a very open market economy which relies on exports as the base for the growth that was subsequently to follow.
Secondly, in the period between 1985 and 1992 in the European Union we had the so-called 1992 Program, which was to remove all border controls, to remove borders and capital services, people, and so on across Europe. That’s had a profound impact on us because we’re a small economy, we’re the English speaking economy in the Euro zone — that’s the Euro currency zone — the only one and we’re in that market.
So, our market is now over 400 million people. And that is now a market which is accessible which, in the past, wasn’t.
DHALIWAL: And a lot of these changes also started back in the late 1950s and 1960s. Give me some examples of that. For instance, there was a massive investment in education, corporate taxes were also lowered to attract multinationals… Give me some examples of how that was part of the boom.
SUTHERLAND: Well, we joined the European Union in the early 1970s. And between 1970 and the late 1980s, we improved a little bit faster in GDP growth per capita than everybody else in Europe.
DHALIWAL: But how did the Europe Union help that?
SUTHERLAND: Well, the European Union helped by opening up borders, opening up opportunities, and also by providing structural funds. Now, the structural funds, which were transfers —
DHALIWAL: Billions of dollars.
SUTHERLAND: Billions of dollars, but it can be exaggerated. It is sometimes expressed in terms of being the reason for the development. I don’t think it was, because I actually think that we wasted a lot of that money. We didn’t build the roads. We didn’t build the infrastructure in the way that we should’ve with the largesse — largely, of Germany — in the early years of our membership of the European Union.
It was the late 1980s when we were faced with a very serious economic crisis. In 1987 even, we had 17.1 percent unemployed. We had, in the northern part of this country, a revolutionary situation, a war situation, certainly a conflict situation.
We had a very high national debt. We had a relatively low GDP. It was less than 70 percent of the EU average. Today it’s over 138 percent. Our unemployment is about 4.2 percent. Our debt is amongst the lowest in Europe. How did we do that? I think part of it was the attraction of low corporation tax. And that’s a 1990s phenomenon not a 1960s phenomenon. We had some pockets of low tax before that where we identified areas like Shannon or more laterally some other parts of the country.
But, in the end of the day, the important thing was bringing down corporation tax to 12.5 percent which is what it now is. And I think that that’s had a very significant draw effect. But, so also — as you properly point out — has education.
We have today — per 1,000 people in the age between 19 or 20 and 30 years of age — we have more scientists and engineering graduates than any country in Europe. So, that’s remarkable. In relative terms, there are more engineers and scientists in that age group than in any country in Europe.
DHALIWAL: And was that a deliberate policy at the time?
SUTHERLAND: It was a deliberate policy.
DHALIWAL: Why was that important? I mean, did somebody have some foresight at that point and realize that this is what we need to do? Was it accidental? Why?
SUTHERLAND: I think it was recognized early on that unlike other countries, virtually every other Western country, we had never had an industrial revolution. We didn’t have old industries here. We basically had agriculture and a few add-on industries of relatively small size. So, we had never gone through the big steel-making, ship-building, mining, and other major industries that other countries had had before.
And we vaulted — thanks largely to our membership in the European Union — directly into high tech, directly into highly productive industries like the whole computer information technology and pharmaceutical sectors which were the main focus for seeking inward investment. Secondly, we realized — as many others have not realized — that trying to build up national champions isn’t the important thing.
DHALIWAL: Why not?
SUTHERLAND: Our national champions are whoever are here providing us with sustainable employment and good working conditions. The fact that they’re American or Irish or British — to my mind, at least — is far less relevant. And I think we recognized that early on. So, we opened our arms to the possibility of bringing in huge investment from the United States. And there was no question of trying at that stage in the 1990s to build up an industrial base that we could call Irish.
And what, in fact, has happened is that this inward investment has spawned a whole lot of supporting sectoral industries — small industries, small ideas that are beginning to grow. And we’re beginning to show that we can do things on our own. Take RyanAir for an example which is number one, two, or three — I don’t know which — in the airline industry in Europe.
DHALIWAL: But is that enough in terms of indigenous investment? What if the multinationals were to pull out and they were to go and find a new market whether it is India or whether it’s China? I mean, that’s something that could happen.
SUTHERLAND: The fact that they are multinational is neither here or there. If they are Irish, capital can move freely. They’re as likely to move. The reality is shareholders demand profits. So, the fact that they’re Irish or American doesn’t make them more or less likely to move.
DHALIWAL: But right now, they’re in Ireland and if they were to move out of Ireland, I mean, that would be a bad thing for Ireland.
SUTHERLAND: Of course it would.
DHALIWAL: It would take away thousands of jobs.
SUTHERLAND: But, the point that you put to me was — am I not worried that they are not Irish firms. I am saying that even if they were Irish firms, they are owned by share holders. And they would be just as likely to move if they can’t produce competitively here as if they are American. Now, of course I’m worried about the phenomenon that companies could move from here abroad. Everybody must be.
And the whole reality of an enlarged European Union with 10 new member states, with a very much lower per capita income and, therefore, lower cost base in some respects, than Ireland presents a challenge.
DHALIWAL: Is Ireland already losing out to countries like Poland?
SUTHERLAND: Well, the evidence doesn’t really support that. And it isn’t supported by the number of people who are coming to Ireland seeking employment or by the fact that our unemployment rate is still one of the lowest in Europe. And our GDP per capita is one of the highest. Now, I’m not saying that we can be sanguine about this forever. I mean, we’ve had a long night and a very short day in Ireland. And that short day, many of us hope, can continue. But, there’s no doubt that we have challenges, just as the U.S. has challenges with China, we have challenges in our way with China and India, too. And with Central and Eastern Europe.
DHALIWAL: So, you can’t afford to be complacent.
SUTHERLAND: Absolutely not.
DHALIWAL: Ireland, of course, has competition from newer countries that have joined the European Union. And they’re looking at Ireland, and they’re very interested in what’s going on here. Do you think that they can replicate the success of Ireland and how much of a problem is that going to be for Ireland, if they do?
SUTHERLAND: I think that they can. They have opportunities just as we had them, and will take them, I’ve no doubt. And I don’t see it as an either-or situation. It’s like when the Spanish came in. Many felt in Germany that this would, somehow, drag Germany down. In fact it raises all boats if everybody competes better. It doesn’t have a negative effect.
DHALIWAL: What do you mean by that?
SUTHERLAND: Well, it’s not an either-or situation. Global trade has always had the effect of raising everybody. You can get pockets of disadvantage where some jobs go to one, as opposed to another. But, when the overall income of the whole area goes up, everybody gains by it.
So I don’t think we’re in a negative situation vis-à-vis the Poles, or the Czechs and the Slovaks. In fact, they’re coming over here, and they’re being taught by our industrial development organization — which brings in investment — how to do it. We’re doing the best we can to be helpful to them.
DHALIWAL: So they’re already on the economic escalator, these countries.
SUTHERLAND: They are. Absolutely. And it’s a very good thing for Europe.
DHALIWAL: Is it a good thing for Ireland though?
SUTHERLAND: It is. Absolutely.
SUTHERLAND: It’s a good thing for Ireland if Europe advances, if growth all over Europe advances. The Irish growth rate over the last decade has been phenomenal even though the growth rate of Europe, as a whole, has been lower than that of the United States. Imagine what our growth rate would have been if France, Germany and Italy were really motoring. The same applies to Poland. Poland, once they start to move up, will be taking our exports, and we will not merely be taking theirs. This is how commerce works.
DHALIWAL: A lot of the Irish people might feel threatened by what you just said, because they think that their jobs are going to be on the line. That if you say it’s OK for these countries to replicate what Ireland is doing, it’s almost like giving away the Irish secrets and letting them take their jobs and depress wages. You know the argument.
SUTHERLAND: Yeah, I know the argument, but I don’t believe it for one instant. I don’t think it’s true. We joined the European Union where everybody could compete and does compete, and it’s good for everybody that we’re in, and it’s good for everybody that they are in. I don’t think it’s an either-or situation. I think that what the Poles, the Czechs, the Slovaks, Slovenians and so on and so forth have to do, is they have to embrace Europe and not nationalism.
And if we were to turn round and to re-embrace economic nationalism — that is erecting borders or being difficult with our neighbors, including the new member states of the European Union — we would be denying the very thing that we need to succeed. Which is to continue to open markets, continue to grow, with others growing as well.
DHALIWAL: But you would say that because you’re a huge fan of globalization?
SUTHERLAND: Yes, I am. Globalization, and above all, European integration, in the first instance, has made us what we are. So, of course, I’m in favor of it. And I don’t like the people who want to turn their back on that and go back into some sort of protectionist enclave — either in that area or, for that matter, in the area of migration. I think we have to be open to the world.
DHALIWAL: Which brings me back to the question of indigenous industries. What are Ireland’s indigenous industries? And why is it so important to grow those indigenous industries in a global economy?
SUTHERLAND: Well, Ireland’s indigenous industries are increasingly in areas like the support services and financial services. The growth of the Financial Services Center in Dublin has been enormously important. We have produced some indigenous companies in areas like, for an example, pharmaceuticals with Élan. We’ve had our own development in other service companies like airlines.
There are numerous companies here that have been formed in the last 10 years which are basically in the high-tech space. That’s the only area that we’re going to be able to survive and win in because the reality is that if we were trying to make major profits, for an example, in textiles, we couldn’t do it any more than the United States could do it. The French couldn’t do it or the British can’t do it because they’d be out-beaten on cost by low-cost destinations.
DHALIWAL: Even though Irish linen is supposed to be world-famous?
SUTHERLAND: Well, Irish linen is justifiably world-famous. (LAUGHTER) And I hope it will continue to be world-famous. But, the reality is that what we have to rely on is our young people — their education, their skill, their capacity to compete better than others. But, we’re living in a highly competitive world. And there’s no assurance that this is going to go on forever. We are living in Valhalla at the moment and we hope it will continue.
I think it probably will because I’m very proud as an Irishman living abroad to see the sort of young people that we’re producing. They’re sought everywhere. And our educational system, I think, is pretty good.
DHALIWAL: The role of women in the workforce — how important has that been to the boom and the subsequent growth? Has that been overplayed?
SUTHERLAND: No, it hasn’t. I think that that’s a very important part of it. Because if you actually look at labor participation, rates, i.e. the number of women working in society, if you have very low labor participation rights, your GDP, your wealth as a country, goes down considerably. I think the number of women working now in Ireland in most age groups, is either at or above the norm in Europe. So it’s been a huge change.
It has pluses and minuses, I’m sure, for the women who work. Some want to work and some would probably prefer to spend more time at home and may have to work. But in terms of economic development, it’s been undoubtedly a good thing. And I think it must be a massively liberating thing in terms of many women and their aspirations. I still don’t think that there are enough women in senior positions, but that will come with time.
DHALIWAL: When you watched the film, did you get nostalgic as an Irishman just looking at some of those dramatic changes, which, for some, were also very traumatic as well?
SUTHERLAND: Well, I’m not nostalgic for the fact that we had 17 percent unemployment in 1987.
DHALIWAL: Nobody’s talking about bringing about the bad old days, right?
SUTHERLAND: No. I don’t think anybody wants that. And, you know, pictures of how we used to live 100 years ago or 50 years ago or 20 years ago may be interesting, historically, but none of us really want to go back to that place. I think we’re looking for something more than that.
And I think that our young people, who are the key to our future, are vital. It’s also important to make the point that — at least for the immediate future — demographically we have young people coming into the market. Many of our competitor European countries don’t.
They have a demographic decline which is very serious. Young people are not coming into the market and old people are retiring from it. And that reduces your dynamic for economic growth. We’re doing well there still.
DHALIWAL: And a lot of those young people that are coming in from other EU countries — we see that in our film. They’re coming from countries like Poland. We have the example of the two sisters. And how are they contributing to the boom and the growth? How important is the migrant experience in Ireland?
SUTHERLAND: A lot of this is anecdotal. For me, it’s fantastic. The people who I come across who are serving me in shops or working in businesses or whatever seem to me to be enthusiastic, very nice people, and they’re a very positive element in the Irish economy.
Eight percent of our workforce today are non-Irish. And that’s happened in a very brief period of time. A lot of them have come from Central and Eastern Europe as a result of membership of the European Union. They are being given an opportunity which countless generations of Irish people had to seek outside Ireland. So, if we’re not welcoming to them.
DHALIWAL: Are we welcoming to them?
SUTHERLAND: I think we are. I think if we were not to welcome to them, we would be denying an obligation which we have to do what others have done to us. There’ve been great periods of migration in the history of mankind between 1870 and 1914.
There was a bigger period of migration, actually, than today, but then it was basically across the Atlantic, significantly from this country and from Italy to the United States. Now, we are participating in a different type of change. It’s slightly more traumatic because in some respects, the people are coming from more alien cultures — in Africa, in North Africa or whatever — different cultures.
DHALIWAL: And that’s difficult for a homogonous society like Ireland?
SUTHERLAND: It should be more difficult, in theory, than the U.S. The U.S., after all, is an immigrant society. It’s all sorts of historic roots with every different group in society, whereas this Republic of Ireland was a very homogenous place full of people who shared the same views, the same religion, the same history, the same everything.
So, it is difficult suddenly — because we have had an explosion of migrants in a very short period of time. Whereas Britain has for decades been receiving migrants including many from Ireland, but also from other parts of the Commonwealth. This is a new phenomenon for us. I think myself, I hope I’m not being guilty of hubris in this, I think we’re doing rather well. I think most migrants here think that they are well received and whilst there will always be tensions, I think that, so far, it’s working well. If we’d a sudden decline in population, in employment, then you really could possibly have more tensions than you have today.
So, we have to work very hard at this. And I’m not saying that there’s no risk to the Irish economy. Whilst our income is very high, you must remember that we don’t have the infrastructure that other countries have developed over a very long period of time.
That’s why we’re going through, as you will see everywhere you go, an explosion of road building and everything else. We’ve had to suddenly develop our wealth. We don’t have a residue within Irish society of huge wealth which is something which GDP growth figures don’t really reflect.
DHALIWAL: We are going through this period of intense international migration. What are the consequences of these big movements of people?
SUTHERLAND: I think it’s an inevitability in the world in which we live — no matter how one tries to build walls, or to deal with this purely as a security or border issue — that it can’t be dealt with in that way. When you have a difference between the poorest countries in the world and the richest countries in the world, where, I think, the figure is that the richest countries in the world, their average income is 56 times bigger than that of the poorest.
And when you have communications, it’s inevitable that migration is part of our lives, and we can’t avoid it. I don’t think we should avoid it. I think there’s also a bit of a moral obligation to try to be as constructively engaged as you can be dealing with migration. Particularly, as I say, a country that’s had a Diaspora all over the world for decades with 30 or 40 million Americans being able to claim their Irish provenance. I mean, this is something where we have to behave ourselves. I think we are behaving ourselves, as I said earlier.
DHALIWAL: You have many hats that you wear. One of them is the United Nations Special Representative on Migration. Where are the migrants coming from? What is the migrant experience in Ireland?
SUTHERLAND: Well, first of all, it’s a global migration. There are significant numbers of migrants in Ireland, for an example, that come from China. It amazed me — as somebody who comes to Ireland once every three or four weeks now for weekends — to find a Chinatown developing in Dublin. Nobody would’ve expected that before. But, we have Africans and we have Chinese.
But, the main preponderance is coming from Poland which we’ve referred to earlier. We also have significant numbers from the Baltic Republics, Latvia and so on.
DHALIWAL: So, who’s pouring the warm pints of Guinness and working on the Irish construction sites which are fueling this massive property boom that we all keep hearing about in Dublin?
SUTHERLAND: I think that they are all. I mean, the Frenchmen, they allegedly voted no on the European Constitution because of the Polish plumber. But I don’t think anyone would be put off by the prospect of a Polish plumber here. They’d probably be delighted to be able to get one.
DHALIWAL: And one of the other consequences is that Ireland’s population, for example, rose to 4.1 million. I mean that’s the highest that it’s been in something like 160 years.
SUTHERLAND: Yes. It is. It’s high by Irish standards, obviously. And the whole island of Ireland is well over five million. So we’ve a bigger population than we’ve ever had before, and that’s a very good thing. How much better it is than lighting candles in the window for members of our family and others who were abroad and never wanted to go in the first place.
DHALIWAL: And Ireland was a net loser of people, now it’s a net gainer of people.
DHALIWAL: And they’re coming from all over the EU, right?
SUTHERLAND: They are. Absolutely from everywhere. That’s a good thing. It’s a sign of progress in my view. And I think that that’s one of the greatest generators of progress. And also, I think, it’s intellectually liberating to live with people from different backgrounds. There was an Irish writer called Brinsley McNamara who wrote of the valley of squinting windows. We don’t want to be a valley of squinting windows. And I don’t think we are.
We’re a people who’ve always been engaged in the world. Our missionaries and our NGOs have been all over the world for centuries. We’ve had links with other countries because of our immigrants. And now it’s time that we opened up in another way, which is to migrants coming here, as best we can. Now there are limits.
DHALIWAL: You’ve written that migration is the mother of progress and invention. Talk about that. What do you mean?
SUTHERLAND: Well, I think it generates a dynamic community. It’s done it in the United States. It opens minds. It creates innovation. And, often, migrants are people who work extremely hard, and therefore benefit the societies into which they come. You can find that in the United Kingdom with the various groups that have come from former colonies. And you can see how dynamic they are. Not drags on the community, which sometimes is the caricature that people who are against migration, produce.
DHALIWAL: How rich is Ireland?
SUTHERLAND: In terms of its income — and GDP isn’t a perfect measurement — but, in terms of its GDP income, it is now one of the top two countries in Europe.
DHALIWAL: That’s astounding, isn’t it?
SUTHERLAND: Well, it is. And I don’t like confusing something that one would like to say simply is correct. But, it isn’t actually, totally, accurate because it allows for — a lot of the money counted in that GDP is the income for multinationals coming into the country and going back out again. But, even allowing for that, we are certainly very much in the top half and above that of the EU. And our national debt is much lower than other people. And we’re in a very strong position at the moment. There’s no question about that. And it would be foolish to deny it. And we’re very proud of it.
DHALIWAL: And why is the national debt so low? I mean break it down.
SUTHERLAND: Because we paid it off. I think we took a courageous decision when we went into the Euro which was very difficult to do in the early 1990s. Britain, after all, was staying out. And Britain was, by far, our largest market.
And we decided we would break from that. It was a political decision which was the correct decision as it transpired. And that has given us a big up, I think, in terms of inward investment because people want to invest into the Euro zone. And we’re in the Euro zone, obviously.
DHALIWAL: Why do technology companies, especially the American ones like Intel and Dell and Yahoo and Google, choose to invest in Ireland? Why not somewhere else?
SUTHERLAND: Well, it’s a combination of things. It’s the various things we’ve talked about — its lower tax rate, highly educated society, English-speaking, culturally adaptable, and close to the U.S. and easy to relate to. And significantly, part of the European Union. The European Union, to me, is the key denominator of this. All of those things combine, I think, to make it an attractive place. Hopefully, when people come here from the U.S. to work and so on, they find it a congenial place to be, too. It still has a certain — I hope I’m not excessively patriotic to say it — but it still has a certain charm.
DHALIWAL: And are a lot of Irish-Americans returning to Ireland?
SUTHERLAND: I don’t know the actual figures. But, anecdotally I would say quite a number are. You have to want to live in a smaller society. I mean, there are disadvantages, too. I mean, Ireland still is a small society. And you’re not living in a grand metropolis. I mean, there’s a big difference between London and Dublin or New York and Dublin. So, there is a cultural adaptation for somebody who wants to live here. But, there are big advantages in a small place. And the support systems of family and so on are still very powerful in Ireland.
DHALIWAL: Let’s talk a little bit about some of the tangible consequences of Ireland’s economic success in terms of salaries, in terms of jobs, and career choices.
SUTHERLAND: The results have been enormously beneficial. Obviously, costs have also risen. So, there is an off-setting factor to the advantages of increased income. I think one of our dangers is that that income growth will get too —
DHALIWAL: So, it’s no longer a low-cost destination?
SUTHERLAND: I think it still is a low-cost destination. But, it’s a low-cost destination because we’ve the highest productivity figures virtually in the world. But, we don’t by any means, have the lowest wages in the world. We have quite high wages and salaries.
So, we have to be very conscious about that. And there is a risk here. And there are certain types of low cost industry which are very labor intensive that will not locate here. And those that are here have closed.
I mean, there was Fruit of the Loom, for an example, was a big industry in the area of producing textiles. It’s no longer viable. In the end of the day, textiles are going to be produced in low-cost countries.
DHALIWAL: But, it’s also a very expensive place to live. I was reading somewhere that Dublin is the 14th most expensive city in the world, not far behind New York or San Francisco when it comes to property prices. I mean, how is that going to be a problem? And how can you afford to live and work in Ireland when it costs so much here?
SUTHERLAND: Well, I suppose, the simple answer to that would be to say we’re higher than 14th if you were taking GDP per capita (LAUGHTER) in the world. So, it’s not quite as bad as it seems. But, having said that, I think that it is true that costs have risen very rapidly.
Part of the reason is that our population suddenly is going up and we have to create property for people to live in. There are very few parts of Western Europe, at least, where the population is growing. And because it’s growing here, it obviously fuels a property boom. There are great dangers in the property boom because prices escalate. Land prices go through the roof. And the whole thing becomes destabilizing and damaging. But, that’s why it’s happening because our population is growing.
DHALIWAL: But, the bubble could also burst.
SUTHERLAND: It could. Yeah.
DHALIWAL: And what would the consequences of that be in terms of Ireland’s future? Forget about the boom for a second but, just in terms of the growth.
SUTHERLAND: Well, if the bubble were to burst …Things don’t happen quite that rapidly. I mean what one could see is a reversal of the creation of employment to the creation of unemployment which would be a gradual process, I think one could have a situation where if interests rate, for an example, in Europe — because interest rates are set by the Euro for us not by our own central bank — if interest rates were to go up, people would find it very difficult to pay their mortgages and so on. And then, the property boom would no longer be a property boom. And then you’d have unemployment in property sector.
DHALIWAL: And people have borrowed very, very heavily, haven’t they during this period of boom and growth?
SUTHERLAND: They have. They have. They have borrowed heavily.
DHALIWAL: Does that worry you?
SUTHERLAND: It worries me in the context of an inability — if it were to occur — to pay the mortgage repayments that they have to pay on their properties. I don’t think we’re going to have a massive explosion in interest rates as far as one can see, but it’s a danger. And I think that borrowing is probably becoming a real worry. I think giving out very large sums of money without requiring significant deposits and so on, makes me slightly squeamish about what the consequences could be.
DHALIWAL: Is this sort of contrary to the Irish character, this level of borrowing?
SUTHERLAND: The problem in the past was nobody would let us borrow because they didn’t think we could repay it. But, I think now maybe people have to be more cautious and concerned about possible downturns such as the one that you were talking about. I certainly wouldn’t say that the Irish are averse to borrowing anymore than anybody else — probably less. We’ve always been risk-takers.
DHALIWAL: And while there have been a lot of people who have been doing a lot better, the gap also between rich and poor has been growing. How much of a concern is that to you? I mean, is that partly to do with the way in which the Celtic Tiger or at least its rewards are very, very uneven — there is the kind of underside, very dark side to the Celtic Tiger as well?
SUTHERLAND: I don’t think it’s quite as dark as your question suggests, to be honest with you. There are some people who’ve made very enormous sums of money. And, obviously, there are people at the other end of the scale who are not making enormous amounts of money. But, everybody has been raised by the development of the Celtic Tiger.
We have a very low unemployment rate and the median rate for pay in Ireland is not low. In fact, in many areas, if you compare what people in the public sector are getting for jobs. For an example, they’re getting more than comparative figures in Europe. So, of course, there are some black spots, but frankly, I wouldn’t compare them at all to the sort of issues that you might have in the United States with ghettos and the problems of extreme poverty.
We have poverty problems, but I don’t think we should present this as being easy to find in Ireland, very deep issues. Certainly, we have to deal with poverty, but I don’t think it’s terrible.
DHALIWAL: And, in terms of inclusion, how do you remedy that situation?
SUTHERLAND: Well, the first thing we have to do is we have to improve a lot of our public services which they’re trying to do at the moment. Our health service, for an example, I think we have to do even more with our educational processes. We have to ensure that we maintain the opportunity for employment. And we have to try to secure a continuing growth by getting inward investment, which means we have to remain competitive. I don’t know that there’s much more that you can do. You have to provide an adequate safety net for the people who are really impoverished.
DHALIWAL: One of the characters that we see in our film is Farmer Deasy. I mean, his basic problem is that he might not be able to pass on his land to his son. What do you do for somebody like that in the Celtic Tiger island?
SUTHERLAND: It’s an inevitable reality that people in Western Europe are leaving the land and that the land and agriculture as we knew it in the past is changing. And all that one can do, I think, is soften that blow. And, I think, there is an attempt to do that in the agriculture sector by supporting people who no longer use land for productive capacities. In other words, take land out of production. But, it’s a sorry thing in a country which is so devoted to land and its history on the land as Ireland. But, there’s no simple answer.
DHALIWAL: But, how do you retrain Farmer Deasy? I mean, what is he going to do — become a software developer? I mean, what are his options?
SUTHERLAND: I think you have to look at the individual and the opportunity for opening employment opportunities in other areas. It’s difficult to be specific about people.
DHALIWAL: Here’s something that THE ECONOMIST magazine said. It asserted that Ireland had the best quality of life in the world. I mean did that surprise you? It wasn’t always the case, right?
SUTHERLAND: You won’t find me denying that, but as far as I’m concerned, when it said we were the dead man of Europe, I think, in 1987, I didn’t agree with them. It was always a good place to live, but it’s a lot better now. But everybody likes their own place, so I don’t want to exaggerate it, and I think it’s a very personal thing.
DHALIWAL: And when you look back at the boom years — I mean, most of this is accomplished in a single generation — what things do you find most striking over the last sort of 15 to 20 years?
SUTHERLAND: Oh, the simple answer to that is the enormous change in the net disposable income of people which is so obvious around you in all our cities and even in the countryside. It’s just been an enormous change. But, I don’t, personally, think that the character of the people has changed. I know you get that here because —
DHALIWAL: More confident? More bullish?
SUTHERLAND: Well, I think we always had an element of confidence, maybe excessively sometimes, but maybe slightly more. Maybe that’s undoubtedly true.
DHALIWAL: And perhaps they’ve lost that excessive touchiness that used to have towards the United Kingdom, towards Great Britain?
SUTHERLAND: Yeah. Well, before we just had a peculiar relationship with Britain. I think establishment Britain always annoyed Irish people in some way. But, the English people never did. I remember an opinion poll in one of our Sunday papers about 20 years ago where the English were actually expressed to be the most popular external people, as I remember it, in Ireland. So, it was always more establishment, government. I don’t ever remember really disliking the English people. We certainly have had a stormy history with them.
They’ve had a stormy history with us. But, I think we get on reasonably well and, certainly, for many of us, including myself, they’ve been generous.
DHALIWAL: Talking about ties between nations, what is the state of ties between the United States and Ireland? Have ties strengthened or are they weakening? What’s happening?
SUTHERLAND: The relationship with the United States has always been extremely close. But, on the other hand, like members of the same family, which in a way, we are, you can get disagreements, and those can sometimes be vehemently expressed. And therefore, I think that Ireland feels very at home with the United States. There are parts of the United States that seem like home.
On the other hand, that doesn’t mean that politically, everybody in Ireland agrees with everything that the United States does politically. And when they don’t agree, like brothers in a row, they will make that very clear. And certainly there have been differences in the recent past between public opinion in Ireland and policy from the United States. But I wouldn’t like to exaggerate that.
DHALIWAL: Well, give us at least one example.
SUTHERLAND: Well, I mean the most obvious one is the war in Iraq, where there certainly was a more negative view taken of that in Ireland. And there are differences and so on. But on the other hand, we feel at home with Americans, and many Americans feel at home here when they come here, from all political backgrounds.
DHALIWAL: So are we going to see fewer young Irish men and women crossing the Atlantic because the opportunities at home are so plentiful?
SUTHERLAND: Well, I think that there will be less going, obviously, because we’ve virtually full employment here, so that won’t be a generator of movement. On the other hand, I think Irish people will still often wish to experience a bit of the world before they come home. And many will seek and gain additional educational qualifications in the United States. And I hope that there’s an interchange which goes both ways.
DHALIWAL: So it’s really choice rather than necessary.
SUTHERLAND: It’s choice rather than necessity.
DHALIWAL: Traveling for the experience rather than because it was a question of survival many years ago.
SUTHERLAND: That’s right. That’s right. Absolutely right.
DHALIWAL: You’re an Irishman, born and bred. You live between Ireland and the United Kingdom for your work. You’ve been a former EU Commissioner for Ireland, Chairman of BP and Goldman Sachs in Europe, a senior United Nations official on migration. I mean if any person could be called the “Celtic Tiger” it would be, you, right? I mean, what do you think? Do you agree?
SUTHERLAND: No, I’ve had the luck of Old Nick. But it hasn’t been a disadvantage to be Irish in any of those roles. And I’ve enjoyed them.
DHALIWAL: And you’re proud of the Ireland of today. How it’s turned out?
SUTHERLAND: I’ve always been very proud of Ireland and I’m particularly proud of Ireland today. I don’t think it’s without flaws. Who is?
DHALIWAL: What’s its worst flaw?
SUTHERLAND: Well, I think its worst flaw might be that we would become complacent and think that this automatically continues without effort. I think we’re going to be faced with challenges every day. I think the whole world is faced by challenges in a competitive and interdependent world. And those challenges are not going to abate. So we have to learn to handle them. We have to continue to grow our skills, and to advance with what I hope will be an advancing world. Not on our own at the expense of others.
DHALIWAL: Peter Sutherland, thank you very much for joining us on Wide Angle.
SUTHERLAND: Thank you very much. I’ve enjoyed it a lot. Thank you.