Ireland after NAMA

I spent most of yesterday at the ‘Geography after NAMA’ workshop that bought together some of the leading geographers in Ireland to consider the NAMA legislation and its implications for Irish communities. The title refers to both the geography of Ireland after NAMA and what the discipline of Geography might add to the debate and our understanding of the situation.

For those not familiar with how the financial crisis has played out in Ireland, NAMA is the new National Assets Management Agency. It is, in effect, a toxic bank that buys the property loan books of five Irish banks for any transaction worth more than five million euro. That covers circa 21,500 assets held by around 2,000 companies and individuals which were collectively valued at €88 billion at the time of the loan (for which €68b was borrowed and €9b is presently owed in interest payments). (The building right is what was to be Anglo Irish Bank's new HQs, now on hold and almost certainly in the NAMA portfolio - €28b of Anglo's loans will be transferred to NAMA, more than any other bank).

Ireland has particularly suffered following the global economic crisis because its property market was so overheated, inflated and poorly regulated. Average land prices at the peak of the market were twice that of any other European country, with the banks borrowing heavily on the international money markets to lend onto individual buyers and developers. This left the banks massively overexposed with assets that were rapidly losing value as well as plummeting share price, resulting in the banks becoming vulnerable to failure as liquidity dried up. Unwilling to let any of the banks fail or to recapitalise or nationalise them, the Irish government initially tried to force some mergers and to recapitalise the banks through private equity investment. Ultimately it has had to nationalise Anglo-Irish Bank and partly recapitalise the others, taking the role of a preferred shareholder, and also create NAMA – the world’s largest, state-owned, property portfolio - to take the bad debts off the banks' books. Ironically, because the state has effectly bailed the banks out it has had to make NAMA a Special Purpose Vehicle, with 51% of the projected €100m running costs provided by private investors in order to keep the debt off the state accounts!

Geographically, NAMA's assets roughly breakdown as: 66% in Ireland, 6% Northern Ireland, 21% Great Britain, 4% Europe, 3% USA, though we do not know how these are geographically configured at the sub-national scale. And although we don’t have a full breakdown of the kinds of assets in the portfolio, Ronan Lyons estimates them as Irish commercial (€11.8bn), Irish residential (€12.4bn), Irish land (€31bn), all foreign (€31.6bn). In fact, we have no real idea as to the true worth of the assets in the portfolio, despite the fact that the government have agreed to pay €54b for what they acknowledge are assets estimated to be worth at best €47b. It seems likely to many analysts that the real value might be somewhat less than this given the amount of development land in the portfolio, much of which will not even be zoned for planning, and even if it was it’ll not be needed for some time given the surplus of vacant and half-finished commercial and residential properties around the country (the so-called ghost estates).

The purpose of the day was to try and work out a research agenda that seeks to take space and scale seriously and acknowledges how NAMA will play out is spatially uneven and unequal, affecting parts of the country in different ways, and its grounding in particular communities is the result of processes operating at different scales from the local through to the global. Too often the analysis of the crisis in Ireland takes a journalist form that focuses on the role of elite actors at the expense of an analysis that examines the neoliberalisation of the Irish state and economy, or works from a macro-economic perspective that treats the country as a universalised, flat plane wherein all places have equal opportunities and risk. The reality is that how the crisis is playing out in rural Tipperary is quite different to Dublin 4, which is quite different to the commuting belts and the border counties for a variety of reasons. What we’ve agreed to do is to collectively try and get a relatively quick handle on what is happening in four different spatial arenas – cities and their commuting zones; the border counties; rural areas; and specific sites of Irish capital investment abroad such as Liverpool – to provide some case study material. This material will form the basis for interpreting what is happening and to set that in an international context. Should be an interesting exercise. We aim to communicate our analysis through a new blog - Ireland After NAMA - which should hopefully start to take shape soon.