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The Ireland-U.S. Council 2011 President's Report
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Dennis D. Swanson
President Fox Television
Stations Group
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On this 49th anniversary of the Council, as we peer through to
our half-century in the coming year, few among us can recall more challenging economic
times.
High unemployment numbers in Ireland and in the United States continue to be problematic;
the banking industry in both economies faces difficulties of worrying scale; the
housing bubble bust continues to reverberate; and bloated social and healthcare
program costs in both countries signal a kind of political and governance dysfunction
that seems to elude solution.
We do see economic expansion on both sides of the Atlantic but it is lackluster
growth that presages continuing pressure on national budgets and household incomes.
Of course, in Ireland in the past year there have been dramatic changes in the political
landscape. A new Government took office following a General Election earlier this
year which exacted a heavy price from the ruling Coalition of Fianna Fáil, Progressive
Democrats and The Green Party – the latter two being wiped out at the polls. Fianna
Fáil, for so many decades the largest and most dominant political party in the country,
has been reduced to a shadow of its former self. After the elections this year,
the party does not even have one sitting TD in Dublin – unthinkable even in the
recent past.
These political shocks in some ways have made it easier for the new Government that
has taken office under the leadership of Fine Gael’s Enda Kenny to administer tough
fiscal medicine in an effort to right the country’s economic ship.
An over-arching reality, though, is that Ireland does possess strong economic fundamentals
that are now being recognized by the international investor community. For example,
the country does have competitive advantage in a highly-skilled labor force. It
is also favored over other places in Europe because of a business-friendly regulatory
and taxation environment.
Other positives recently noted in America’s business press include a relatively
prudent fiscal policy leading into the financial crisis – in 2007 Ireland’s public
debt was only 25% of GDP and the Government’s income and expenditure books were
balanced. Since 2008, Ireland has also fashioned a 20% drop in unit labor costs
in its manufacturing sector. In addition, broad-based wage cuts, including in the
public sector, are painful but are beginning to work. Ireland’s trade surplus has
doubled and now runs at more than 20% of GDP.
This robust export performance has helped Ireland become Europe’s second-fastest-growing
economy in the second quarter of this year. This is good news in the matter of the
deficit-reduction targets set by the European Union and the International Monetary
Fund following the economic bailout package agreed earlier.
Like a magnet, Ireland continues to attract valuable foreign direct investment which
rose by almost 20% thru June of this year, led by technology and services companies.
Ireland's banks have also been pulled back from the brink. The banking system has
been re-capitalized, and continues to de-leverage vigorously. The bank stress-tests
in Ireland have been among the most demanding and credible in Europe - the only
ones to have used an independent external agency instead of just local regulators.
Other good news is that Ireland’s Government does not have to return to debt markets
until the middle of 2013. It appears that the worst is over in the matter of budget
allocations in recapitalizing the banks. Remarkably, these massive capital investments
in Ireland’s banks have been expensed as current account items in Ireland’s budgets.
This, of course, has made the budget deficits of the past two years look massively
and lopsidedly negative.
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Ireland’s NAMA – The Largest Property Fund On Earth
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For sure, as economic calamities go, this was a big one. Ireland’s banking collapse,
precipitated by imprudent bank lending in the real estate sector, has left much
misery and distress in its wake. Following the rescue of the country’s banks, Ireland’s
Government has been saddled with massive real estate holdings that have been bundled
into a new entity called the National Asset Management Agency or NAMA. It is now
the largest property fund in the world – holding about $100 billion in real estate
assets.
While it is still early, many positive indicators have appeared in recent months
suggesting that the strategy being pursued by NAMA and the Dublin Government may
be starting to work. Several large real estate transactions have been approved by
the agency in recent months, especially in the London real estate market where values
have enjoyed a strong recovery. The Government has also successfully packaged and
sold a $10 billion portfolio of real estate loans in the U.S. market that had been
signed on the books in its heyday by the now-nationalized Anglo Irish Bank.
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The European Threat to Ireland’s Low Corporate Tax
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Because of the massive costs of the banking industry’s problems, the national finances
have come under extra strain at a time when tax revenues have fallen sharply.
This time last year, we discussed some attempts that had been made in the United
States Congress to end tax deferral, a practice whereby American companies can defer
paying taxes on revenues earned abroad until those profits are repatriated. This
would have eliminated the benefits of Ireland’s low-tax regime for American corporations.
Happily, that threat has passed and we see no likelihood of it re-emerging.
However, during the past year, some European governments had been pressuring Ireland
during bailout package negotiations to change the low corporate tax code. As before,
we were pleased to see that all political parties in Ireland - in and out of Government
- have forcefully underlined Ireland’s commitment to the long-standing low-tax policy
for corporations.
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Northern Ireland’s Corporation Tax
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We continue to follow with interest the moves being made to lower Northern Ireland’s
tax rate for companies which is currently considerably higher than the rate in the
Republic.
A report has now been published by the Northern Ireland Affairs Committee of the
U.K. Parliament in London that has completed a wide-ranging inquiry and has now
recommended that corporation tax in Northern Ireland be reduced to the 12.5% rate
prevailing in the South. Your Council made a submission to this Parliamentary committee
strongly urging this initiative. It now remains to be seen whether the British Government
will proceed with the measure. Separately, the London Government had announced plans
to reduce corporation tax in the U.K. from 28% to 24% over the next four years.
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Council Partners in the Arts
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As many Council members know, we believe that our Council platform is immeasurably
improved by partnering with outstanding arts organizations. By showcasing excellence
in the arts, our Council activities are enhanced by the artistic performances this
collaboration encourages.
The Council has offered support during 2011 to the Royal Hibernian Academy, the
Irish Baroque Orchestra, The Royal Irish Academy of Music and the Abbey Theatre
among others.
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48th Annual Dinner of the Council in 2010
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The 48th Annual Dinner of the Council saw another full house in attendance and was
a great success. The Council’s Award for Outstanding Achievement was presented to
Jeff Smisek, Chairman & CEO of United Continental Holdings, parent company
of the just-merged United Airlines and Continental Airlines.
The Council was pleased to honor this important and successful businessman who is
in the driving seat of the world’s largest airline - a company that sustains a vital
part of the transatlantic air-bridge that connects Ireland and the United States.
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Member-Guest Reception in Dublin
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The Guest of Honor at the Council‘s Member-Guest Reception at The Four Seasons Hotel
in Dublin in December, 2010 was Enda Kenny, then leader of Fine Gael and subsequently
elected Taoiseach to serve as Ireland’s Prime Minister.
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Winter Meeting: Florida 2011
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This year’s Winter Meeting of the Council was held in Palm Beach, Florida in February,
2011. The theme of the Council meeting was the economic messaging that Ireland has
adopted to deal with perceptions around the world, especially in the U.S. financial
markets, during the economic crisis of the recent past.
The Council heard interesting and informative remarks on the matter from Michael
Collins, Ireland’s Ambassador to the United States. The Council meeting was also
addressed by Dr. John Lynch, Chairman of CIE, Ireland’s national transportation
company. Dr. Lynch delivered interesting remarks on the current state of Ireland’s
economy.
This year’s Winter Meeting schedule included a generous opening-night hosting of
a cocktail cruise on the IntraCoastal waterway by Council member Bill Mahoney which
was enjoyed by all the Council’s 2011 Winter Meeting participants.
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2011 St. Patrick’s Luncheon in New York
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The Grand Marshal of the 250th Saint Patrick’s Day Parade Parade in New York was
the noted Irish-American author Mary Higgins Clark. She was the Guest of Honor at
the Council’s St. Patrick’s Lunch on March 16 last. The Government of Ireland was
represented by Ireland’s new Deputy Prime Minister, Tánaiste Eamon Gilmore.
The entertainment program featured a spectacular double bill – back by popular demand
- the extraordinary traditional Irish musical talents of Dé Danann and one
of Ireland’s most promising young sopranos, Naomi O’Connell.
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Council Hosts Spring Corporate Lunch in Dublin
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A Guest Speaker double-bill occupied the speaker’s platform at the Council’s Spring
Corporate Lunch gathering held this past May in Dublin’s Four Seasons Hotel.
Members and their guests heard from the noted American legislator, Congressman Richard
E. Neal (D. Mass) who represents the Second District of Massachusetts in the United
States Congress. He also serves as the Democratic Leader of the Friends of Ireland
in the U.S. Congress and in his remarks displayed a remarkable, insightful and comprehensive
grasp of current political and economic issues affecting Ireland-U.S. relations.
Ireland’s Minister of State at the Department of Finance, Mr. Brian Hayes TD, addressed
the group on the progress of the country’s radical economic restructuring program.
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MidSummer Gala Dinner in Dublin
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The Council’s Midsummer Gala this past June, 2011 was again held in historic Dublin
Castle. Guests were treated to a memorable concert by the Irish Baroque Orchestra.
It was a spectacular evening of entertainment that also included the presentation
of the Council’s Award for Outstanding Portraiture.
At the dinner following the first part of the concert and reception, Senator David
Norris, a candidate in Ireland’s 2011 Presidential election offered interesting
and thoughtful remarks.
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Council Golf Days in Ireland and New York
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Many members in both countries enjoy the opportunity to participate in Councilorganized
Golf Days. In July this year, the Council staged its Annual Golf Day with another
successful event at Rye Golf Club in Rye, New York.
On the other side of the Atlantic, there was a strong turnout of Council members
and their guests on hand in early September at the splendid Palmerstown Stud Golf
Club in County Kildare near Dublin. The post-golf proceedings were chaired by New
York-based Council Vice President Diarmuid Hogan.
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Scholarships Program
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The Council’s annual program of Student Work Experience Scholarships for
2011 was celebrated this year at an awards luncheon held at The Metropolitan Club
in New York City in June.
This is the 27th year in which the Council has operated these successful Scholarship
Awards. As we have stated before, the Council's participation in this program reflects
its interest in highlighting the excellent educational infrastructure which has
been developed throughout the island of Ireland. Universities from North and South
participate. This year colleges from Belfast, Cork, Dublin, Galway and Limerick
were represented in the program.
The Council is partnered on this program with Fordham University for those Council
Scholars based in New York City. These scholars are accommodated in the residence
halls of the Lincoln Center campus of the college during their time in Manhattan.
We greatly appreciate the support of Fordham University on this program.
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Conclusion
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On the eve of the Council’s 50th anniversary year, we know that, despite the extremely
challenging economic conditions that have prevailed during recent years, the economic
and business bonds between the United States and Ireland continue to be durable,
deep and dynamic.
Ireland’s businesses continue to invest in the United States while the flow of U.S.
investment into Ireland has been sustained at high levels despite the international
economic recession.
It is our hope that the various economic policy prescriptions fashioned on both
sides of the Atlantic to cure the current severe economic ills will be successful.
We cherish the hope that the trade, investment, tourism and other business links
between the United States and Ireland, north and south, will flourish and prosper
as we prepare to embark upon our second half-century.
The Council’s principal goal of building business bonds between America and Ireland
continues to inspire and inform the substance of the programs and activities that
the Council shapes and implements. We thank all our members in the United States
and in Ireland for their participation and support this past year. We invite your
continued help, support and encouragement for the coming year.
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Dennis D. Swanson
Council President
November 10, 2011
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Click here to download the 2011 Annual
Report (PDF format, 9MB)
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