Dublin Opinion

John Lanchester has a post that is worth reading on the London Review blog about the irony of the Conservative Party launching their 2010 election manifesto at the abandoned and now crumbling Battersea Power Station.

Briefly, the Conservative party allowed the power station to be sold off in 1983, in a bidding process that was supposed to be an open competition to find the best use of the station. Ultimately, however, the consortium of builder’s banks and architects who won the bid was taken over by Tory party insider, Alton Towers entrepreneur and member of the consortium John Broome. He then secured more finance and moved the plans for development away from the more outwardly civic society-orientated idea (it was supposed to be turned into theme park based on episodes from Britain’s industrial history) towards the American theme park model.

See here for more on this, but the following is worth quoting.

The gullible Conservative local (Wandsworth) council supported the theme park and gave Broome planning permission in May 1986. They ignored the evidence from Battersea Power Station Community Group that traffic would make the roads impassable. The claim that 4,000 new jobs would be created was a 10 fold exaggeration and that £35 million was not enough to pay for the extravagant proposal.

Sound familiar?

Anyway, let’s proceed. Lots and lots of ideas and detailed architects plans were drafted and scraped, power-lunches were booked in penthouse restaurants and fancy powerpoint presentations with swish-sound delivered slide changes were attended by excitable gold cuff-linked wearing property speculating meat-heads. All came to nought and in 2006, the now deteriorating ex-power station was bought up by Irish property jetsetters, Johnny Ronan and Richard Barrett through Real Estate Opportunities to become part of the property portfolio of Treasury Holdings.

I’ll hand over to Ireland After NAMA for more on this:

“The site is currently owned by REO, a firm majority owned by Irish company Treasury Holdings (who coincidently are also NAMA’s landlord). REO bought the 40-acre site in 2006 for £400 million (€532 million), using loans from a variety of banks, of which Bank of Ireland forms the majority share, with plans to develop the site into seven million square feet of mixed-use residential, retail and office space. As such, this emblem of British industrial heritage has found its way into the auspices of NAMA, serving as indication of the reach of Irish capital into international markets, and of the relational production of urban landscapes in the post-industrial period.”

The upshot of the spin from NAMA is that this is still a prime development asset, and while much of the portfolios going the to bad bank are of the hugely inflated variety, the Battersea Power Station site is considered the “jewel in the crown” of what the Irish taxpayer has been forced to acquire.

(Small note here. The reference to the power station as the jewel in the crown of NAMA’s property portfolio seems to come from the title of the Ireland After NAMA post, written by Delphine Ancien and Cian O’ Callaghan. However, while googling I found that it was also used today by Mark Hennessy in his report on the manifesto. presentation.)

Delphine Ancien and Cian O’ Callaghan on IAN, however, mention some of the problems that the site had had since it was bought in 2006:

“Since late last year REO have been looking for a partner to invest with them in the site. While the London market will recover quicker then most, it is likely that investor confidence is still likely to be waning.”

One considers that this point couched in academic caution is hugely optimist. They also cite a commentator in the Londonist who makes an observation that when a monolithic property can no longer serve any useful purpose it can always seek gainful employment as a symbol.

For the Londonist commentator it’s a symbol of the flaws and fallacies of [the ‘UK’s] developmental strategies:

“Over 25 years since it breathed its last fumes into the London fog, Battersea Power Station remains a blot in the copybook of countless developers and architects, and as yet another scheme is run through and rejected, the building’s gradual decomposition will continue. Perhaps it should be this way, a symbol of the flaws and fallacies of our developmental strategies.”

For Ancien and O’Callaghan its an emblem of urban degeneration.

“At the moment, despite its prime location in Central London, Battersea looks much more like an emblem of urban degeneration rather than regeneration.

For John Lanchester it’s a symbol of ‘broken Britain.’

So the disaster of Battersea power station is a story about some of the many ways in which Britain doesn’t work, a failure of both public and private sectors, a failure of both money and government. It’s a much better symbol of ‘broken Britain’ than anything from the tabloid horror headlines.

But what is it for Ireland taxpayer? Referring to it as a “Jewel in the Crown” of the NAMA payload with the colonial overtones piles on the irony given the economic and political structure of Ireland as a post-colonial society that historically has been unwilling and resistant to severing its economic dependence on Britain. Leaving aside any debate about whether Ireland had the ability to be more or less economically independent historically it is the nature of that dependency that is rarely, if ever, analysed and the constant repetition now, of Ireland being a ’small open economy’ goes to the heart of that.

A February 2010 paper, Breaking the Sterling Link co-written by Patrick Honohan, now governator of the Central Bank, details these connections while discussing the background to Ireland’s decision in 1978 to finally break with Sterling.

For over half a century after Independence, Ireland maintained a one-to-one currency peg with sterling. At first, this was not an unusual position for an ex-colony. But, one-by-one, each of the former countries of the sterling area abandoned such a link, typically very soon after independence. Some countries were motivated either by economic nationalism or a desire to exploit the apparent pro-growth potential of an autonomous currency. The break in other countries was driven by unsustainable expansionary money-financed fiscal policy. By the end of 1978 Ireland was the only former sterling area country to have maintained an unchanged parity since independence.

Emphasis mine.

I’ll refer you back to Conor’s Lights of the City post to help you figure out why they were the last former sterling area country to be pegged to Sterling.

It’s a relationship that Honohan himself doesn’t seem to appreciate although he all but spells out the connection.

In the end, though, the net mood was for regime change if that was the price of continuing to build the new relationship with the European Union. Transitional costs could be absorbed with the benefit of cash transfers which were vigorously, and successfully, pursued. And any residual desire to stay tied to the apron strings of the sterling link was swept aside when, in an embarrassing and irritating diplomatic faux pas, British officials failed to inform their Irish counterparts of the outcome of secret inner discussion between the three largest European Community countries. This seemed to expose Ireland’s perceived status as a client of Britain (at least in financial terms), a perception that, for reasons of national pride, had to be scotched.

Again, emphasis mine.

Part of the pressure to finally break the link came about by sudden availability of a viable alternative (because of moves by France and Germany to stabilize the DM as a suitable trading currency within the EEC which Ireland had recently joined) but also because of the inflation in the British economy was having a knock on effect on the cost of Ireland’s imports.

“That the key policymakers clearly understood that inflation in a fixed exchange rate regime was ultimately imported is definitively shown by Governor Whitaker’s (1976) statement: “no small country dependent on international trade can defend itself in the end from the inflation prevailing in its main trading partners”.

Furthermore, he pointed out that as long as a sterling link was in effect control of Ireland’s inflation would depend on that of Britain.”

So what does this have to do with Battersea Power Station? Well, I suppose it has to do with the piling on of irony, and the employment of the decaying relic of a more productive past as a potent symbol of the political and economic situation in which Ireland now finds itself.

It’s a symbol of the failed Tory policy to privatizing public assets for the enrichment of capitalists but to the detriment of the country they are supposed to serve. But this is not unique to the Conservative party, as it’s a policy that is followed by almost every country in what is known as the Global North and is now tagged as Neo-liberalism.

But, it’s the irony that gets me. Ireland’s economy was constructed as a colony to provide live cattle for the processing of meat in mainland Britain to feed workers in its industries. As with all colonies they also had to ensure that the colony was a market for the products that these industries produced. In order to ensure that this ran smoothly the colony required a series of middle-men to act as agents in the process and who were allowed to enrich themselves in the process. These middle-men maintained control of their wealth through ownership of land.

After Independence this structure remained in place. But now, in the latter part of the century those who controlled the ownership of land started to become super-rich, to the point that they looked beyond Ireland to invest and once again, they invested in land.

They could now go to the centre of the former empire and buy prime real-estate for vast sums of money. But because of the policies of those who they supported and supported them, the source of their wealth became unstable. The policy of allowing a market to control itself, so vigorously employed by both the Irish and British governments and first developed by the Conservative party in the UK brought that market to its knees.
Now David Cameron, leader of the Conservative party is launching his ‘regenerating’ manifesto and is hoping to lead a country that created the nature of the Irish economy which allowed people like Johnny Ronan to buy the site. But 88 years after Independence this little bit of British capital is owned by the Irish people. And this ‘jewel in the crown’ is unlikely to repay the price that they have been forced to pay for it.