Kenny plays a high-stakes game on bank debt deal

Last Sunday it was Enda Kenny’s turn on the series of party leader interviews for RTÉ radio’s This Week programme. Over the course of a 19-minute exchange with Fran McNulty, the Taoiseach four times uttered the sentence, “I am confident a deal will be done by the end of March.”

Our Taoiseach does few extended interviews. So when Enda Kenny does a media interview and chooses therein to make the same point no fewer than four times, he is obviously trying to tell us something.

The Taoiseach’s repetition arose when McNulty asked him whether the Government would be able to secure a deal on the Anglo Irish Bank promissory notes and before the next payment of €3.1 billion due in March. The Taoiseach said he was confident there would be and, when pressed by McNulty on a Plan B, the Taoiseach repeated his confidence three times. In fact, the last time he said not only was he confident there would be a deal but that he “expected” there would be a deal.

If the Government does not get a deal on the promissory note and other aspects of restructuring of the bank-related components of our national debt, it will have significant economic consequences well beyond the amount involved.

A failure to secure such a deal would undermine sprouting confidence about Ireland on international markets and at home. In his Sunday interview, Kenny advanced a positive scenario in which a deal would mean “interest rates will fall, banks will be more flexible with credit”, all of which would contribute to recovery, and described a deal on the promissory note as “central” to our prospects of getting out of the bailout programme before early next year.

It is also clear, however, these negotiations and their outcome will have significant political consequences for the Government, not least because it itself has put so much store by them. Politically it would be devastating if it does not happen.

Kenny must know that and he must also know that a deal is coming or he would not have upped the ante as he did on Sunday. The Taoiseach’s language and emphasis suggests something significant is happening in the to-and-fro between Dublin, Brussels, Frankfurt and the IMF headquarters in Washington.

If Kenny, with considerable involvement from Michael Noonan, manages a deal on the banking debt, then he will have overcome another hurdle. Many political hurdles in his path are either carefully circumvented or simply dissipate.

He has been both an able and a lucky premier. In his first months he basked in the approval for the visiting Queen Elizabeth and then President Obama. His Government collaterally benefited from the reduced bailout interest charged to the Greeks. The macro situation appears to be easing, although unemployment, private debt and austerity budgets mean the situation for many households has not eased much.